Mr. Motilal Oswal, the founder of MOFSL, has, in his latest interview, recommended five large-cap and five small-cap stocks as being worthy of investment in 2016 and beyond.
“What are your top five multibagger ideas for 2016 with a minimum investment horizon of three years?
Motilal Oswal: Bajaj Finance, Sun Pharma, SBI, ONGC, and InterGlobe Aviation are the five largecap stocks to watch out. Among the smallcaps, I would bet on Alkem Labs, DFM Foods, Astra Micro, Eveready and Lincoln Pharma.”
Let’s take a quick look at the five small-cap stocks recommended by Mr. Motilal Oswal:
|Five Small-Cap stocks|
|Stock||CMP (Rs)||MCap (Rs Cr)|
The first thing worth noting is that of the five small cap stocks referred to, two are Pharma stocks. This is because Pharma stocks have been consistent wealth creators for the past several decades and are expected to be so in the future as well.
Of the five stocks, DFM Foods is somewhat familiar. This stock was first recommended by Ekansh Mittal’s Katalyst Wealth on 19th April 2015 when it was at Rs. 322. Today, the stock stands tall at Rs. 970, resulting in eye-popping gains of 200% in just nine months.
DFM Foods’ credentials as a quality stock are established by the fact that Westbridge/ Jwalamukhi holds a massive chunk of 25% of the equity.
It is worth noting that 82.18% of DFM Foods’ equity capital is collectively held by the promoters, Westbridge/ Jwalamukhi and two other HNI shareholders.
This means that there is really no floating stock available for sundry shareholders.
It may be recalled that Sumir Chadha, the whiz-kid behind Westbridge/ Jwalamukhi, had revealed that it is his strategy to corner large stakes in top-quality small cap stocks because this results in “mis-pricing” of the stock.
Eveready is also mildly familiar because Ashish Kacholia holds a major chunk in it. Akash Prakash’s Amansa Capital also bought a chunk of 5,48,000 shares of Eveready on 06.11.2015.
Astra Micro is of the same top-quality caliber. It happens to be one of Sanjoy Bhattacharrya’s favourite stocks and had pride of place in his famous Model Portfolio.
There is a detailed research report on Astra Microwave by Oscar Capital. The report explains how Astra’s expertise in the Defense sector coupled with the Government’s ‘Make in India’ will bring great prosperity to the Company.
Amongst the Pharma stocks, Alkem Labs made its IPO debut a few days ago. The IPO was highly recommended by most brokerages on the basis of the Company’s powerhouse track record and reasonable valuations.
Lincoln Pharma is a mystery stock that has never been heard of before. Preliminary inquiry reveals that the stock is a micro-cap with a market capitalisation of Rs. 409 crore. It has been a powerhouse so far with a mind-boggling return of 213% YoY and 625% in two years.
The interesting aspect is that none of the super-savvy investors appear to have discovered Lincoln Pharma so far. There are also no research reports on the stock so far.
So, of the five stocks referred to by Motilal Oswal, Lincoln Pharma appears to be the perfect “hidden gem” to take us to the road of riches if we are able to research the stock thoroughly and muster the courage to buy a truckload of it!