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Thursday, January 8, 2009

Value Stocks To Buy In 2009 - Buying Stocks With Strategy - Value Investing

These pessimistic times do present an opportunity for long term, patient investors to buy stocks with intrinsic value and make extraordinary money in returns. Buying stocks should be done with a strategy known as Value Investing.

2009 is likely to be a year of consolidation. Things are likely to get worse before getting better.
Since it is always difficult to time the markets and also because the current recession is a worldwide phenomenon, only genuine long-term investors having a holding period of at least three years should go ahead and start buying shares. Also, due to the volatile nature of the markets and the likely longevity of the present bear market, it will be beneficial to keep trading in your portfolio.

Use upsides to keep booking profits and panics to buy the same stocks again. Some of the stocks where we recommend investors to start accumulating from the present

NOIDA TOLL BRIDGE
The traffic on the flyway is expected to increase at a healthy rate, mainly due to the ongoing residential and commercial development in Noida and Greater Noida.

Checkout: ANALYSIS OF NOIDA TOLL Bridge
Land bank on the either sides of the bridge is an additional asset. The company expects further 40% growth in its average daily traffic over next two years due to Commonwealth games to be held in Delhi NCR in 2010.


STATE BANK OF INDIA
Investors looking for a large-cap stock which will add value to their portfolio can consider accumulating the State Bank of India stock in declines.

Checkout: State Bank of India (SBI) - Elephant in Banking sector

Beaten down valuations, strong financials in an extremely challenging macro environment, with sustainable growth in advances, make the bank stock attractive. Though the bank trades at a premium to all public sector banks, this appears justified given the size of its balance-sheet and the huge market share, despite which it has delivered better financial performance than its peers.

Market share for the bank has improved in recent quarters.


NTPC
With its existing operations, ongoing expansion plans and high profitability, NTPC is favourably placed in the power generation space.

Further, the shortage in power supply, which is expected to remain in the medium to long term, will keep the capacity utilization of power plants at a high level.


INFOSYS
The best known IT stock from India.

Well reputed as a quality solution provider, has very long established relationships with a number of leading banks and corporates in the US and other places, impeccable record of transparency and good corporate governance and strong balance sheet are some of the features why we feel Infosys is a must in every investor’s portfolio.


Larsen & Toubro
India’s infrastructure story is best captured by L&T.

Strong management, healthy order book position, diversification across product categories and geographies are some of the strong points of this bellwether engineering company.
Checkout: Best Indian stock pick: Larsen and Toubro



BHEL
Largest power component manufacturer in India. Strong order backlog, capacity expansion to meet demand and robust capex lined up for power projects augur well for the company's earnings growth.
Checkout: 10 Biggest Wealth Creators (Best stocks for safe Investment)


BANK OF INDIA
Bank of India has a strong balance sheet growth, stable margins and good quality assets.

The reduction in NPAs, increased book value and improvement in return on assets are indicators of the bank’s superior performance across parameters.



BAJAJ HINDUSTAN
The largest manufacturer of sugar in India. Sugar cycle seems to be turning around making this company, which has used the two year downturn to substantially increase its capacity, an extremely attractive buy.

By-product of ethanol and co generation of power are other strong points of this company.



LIC HOUSING FINANCE LTD.
Targeting gross NPA of 1.5% for FY09 and disbursement growth of 40%.

Checkout: LIC Housing Finance - Invest in this stock for long term

Currently trading at 0.8 times of its book value. Attractively valued at 2.8x and 2.2x of FY09E and FY10E EPS. Dividend yield of around 5% makes it quite attractive bet providing consistent performance.



INDIAN HOTELS LTD.
Diversified portfolio of rooms spread across India and abroad. At current market price of Rs 46, the stock trades at 6.5x and 5.0x of its FY09E and FY10E earnings, respectively.

Attractive valuations keeping in mind its future expansion of properties and stability in ARRs and occupancy rates in the cities like Delhi & Mumbai. Certain major events like the Commonwealth Games planned in Delhi in 2010 would require addition to the inventory of rooms which would again help the company having good exposure in the capital.
The current market capitalization of less than Rs 3,500 crore is at a steep discount to the 86 hotel properties it owns and operates across India and abroad. In addition, it is developing various new hotel properties in different locations in India, South Africa, Dubai and Morocco.



CHENNAI PETROLEUM CORPORATION LTD.
Good track record of paying hefty dividends for past few years. Pure refining player with no marketing losses unlike IOC, BPCL and HPCL. Attractive dividend yield – around 14% on FY08 annualized dividend of 170%.

Currently trading at half of its book value. Capacity expansion by 1 mn tpa of Manali refinery to provide further boost to the business. Available at just 1.5x FY10E EPS.



AMBUJA CEMENTS
Strong balance sheet and low financial leverage with debt to equity ratio of 0.10. Attractive dividend yield of around 5% in the current calendar year.

Stock can get further fillip as Holcim is likely to further increase its stake in the company. Higher key return ratios like ROCE compared to peers. Cement company with the best operating parameters. Currently trading at 1.8 times of its book value.



STERLITE INDUSTRIES
At the current price of Hindustan Zinc, the 64.9% stake of Sterlite Industries in Hindustan Zinc is valued at around Rs 9,000 crore.

Cash on book around Rs 9,900 crore after deducting debt. Current market capitalisation of Rs 15,400 crore is less than the sum of its stake value in Hindustan Zinc and cash on book. Current market capitalisation is just 1.7 times of its FY08 operating cash flows. The values that are expected to be realised from the energy business, zinc and aluminium expansion plans will certainly add much more value.

Last but certainly not the least, their existing business of aluminium and copper is not being valued at all by the market. Deeply undervalued stock of a very well established and diversified non ferrous metals player.



PRAJ INDUSTRIES
It is a leading equipment manufacturer of ethanol and other chemicals.

Very strong order book, good technology platform and strong alliances in the US and other markets makes this company a very strong bet in the non-conventional energy space.
CHECKOUT:
Praj Industries- Giant in making - Bio-Diesel segment
Bio-Diesel future prospects

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