In any kind of Investment, The aim is to make profit. That can be done if you buy at a low price and sell at a high price. Selling High is a speculative venture and depends on whether the price of your investment will go up or not. And that is the reason we look into a company's credentials like P/E and book value and its growth . But to buy low is one decision that is in our hands.
How to do it!There is an anecdote in financial world. "If you see a 100 rupees note lying on the road, it is probably a fallacy because if it had been a 100 rupees note, it would have been grabbed by now." That is how rare a good buying opportunity is. If a company is good, people would have stumbled on to it before you, but as it goes, though good buying opportunities are rare, they do exist. A lot of times, some companies go into oblivion not because they are not doing good, but because the investing community has not paid much attention to it. And so with less demand, less price. But gradually people come to realize about that company's good performance and the demand increases and so does the price.
Also at times when the market performs poorly some stocks fall more than others for sometime. It is because of the sentiments. But there is no place for sentiments when it comes to investing. It is all about facts. What one needs to do is look for such stocks. For example , my last pick of the week Amtek Auto and Amtek India had fallen around 6 percent in one day when the market fell by 1.5 percent. But surprisingly it had given a good growth for the december quarter. And so within a week, it came back to its original price and I had a 6 percent return in one week! though i won't sell it for that.
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Now looking at Kwality dairy India limited, it used to trade at around Rupees 180 three years back, but now trades at around rupees 40. It fell during the period of recession and now has failed to take off. It has reported a consistent growth of around 20 percent. It trades at a P/E of around 6. It is only a matter of time that it picks up. When it comes to a decent price compared to its earnings compared to its peers is something that can not be predicted but it is something that can be expected.
Rule 6: Buy low. Buy during dips .Those dips should not be due to a legal case or poor profits.
Never buy a stock when it is trading within 10 percent range of its one year Highest value.
Pick of the week: Kwality Dairy India Limited. It is trading at Rupees 39.45 at NSE. It has a P/E of 6.03 and an annual growth of around 20 percent. It used to trade at around Rupees 180 three years back and has posted good profits since then.
Usher Agro: It is trading at rupees 50 at NSE with a P/E ratio of 2.16 and price to book value of 0.50. It had a high value of Rupees 150 three years back . It has shown a decent growth of 25 percent annually over this period.
How to do it!There is an anecdote in financial world. "If you see a 100 rupees note lying on the road, it is probably a fallacy because if it had been a 100 rupees note, it would have been grabbed by now." That is how rare a good buying opportunity is. If a company is good, people would have stumbled on to it before you, but as it goes, though good buying opportunities are rare, they do exist. A lot of times, some companies go into oblivion not because they are not doing good, but because the investing community has not paid much attention to it. And so with less demand, less price. But gradually people come to realize about that company's good performance and the demand increases and so does the price.
Also at times when the market performs poorly some stocks fall more than others for sometime. It is because of the sentiments. But there is no place for sentiments when it comes to investing. It is all about facts. What one needs to do is look for such stocks. For example , my last pick of the week Amtek Auto and Amtek India had fallen around 6 percent in one day when the market fell by 1.5 percent. But surprisingly it had given a good growth for the december quarter. And so within a week, it came back to its original price and I had a 6 percent return in one week! though i won't sell it for that.
Now looking at Kwality dairy India limited, it used to trade at around Rupees 180 three years back, but now trades at around rupees 40. It fell during the period of recession and now has failed to take off. It has reported a consistent growth of around 20 percent. It trades at a P/E of around 6. It is only a matter of time that it picks up. When it comes to a decent price compared to its earnings compared to its peers is something that can not be predicted but it is something that can be expected.
Rule 6: Buy low. Buy during dips .Those dips should not be due to a legal case or poor profits.
Never buy a stock when it is trading within 10 percent range of its one year Highest value.
Pick of the week: Kwality Dairy India Limited. It is trading at Rupees 39.45 at NSE. It has a P/E of 6.03 and an annual growth of around 20 percent. It used to trade at around Rupees 180 three years back and has posted good profits since then.
Usher Agro: It is trading at rupees 50 at NSE with a P/E ratio of 2.16 and price to book value of 0.50. It had a high value of Rupees 150 three years back . It has shown a decent growth of 25 percent annually over this period.
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