Growth vs Cheap Valuations ...

Ur Opinion Friends … Should we buy Good Companies available at cheaper valuations or A High Growth Company corrected 30-40% from Peak but still above its Fair value ….

 

@yembee Very tempted to go for good stocks with low valuations... But I guess the next set of stocks which will lead the rally ( whenever that comes) are off their 52 week lows and already on their upward journey.

 

Yes tempting right.... But How can we conclude they are already on the upward journey... Do you think the correction is over.

There are many theories : bottom fishing / Growth chasing / Contrarian etc part of Value Investing... Market gives chance for everyone at some point of time. It requires skills to know when !!!

I tend to believe that the Nifty may oscillate around 7000 for longer time as time correction ... to shed the Euphoria created by over anticipation ... This process will bring the next set of best performers ( I am bit annoyed with the word Multibagger ) above the rest....

 

A newbie's perspective. When the market is beaten down so harshly, like we see today, it is better to focus on buechip stocks, available at cheap valuation. During the bull market, all the good stocks would have been going up and up. Then, it is better to look for value stocks. May be wrong. Would like to know others' views.

 

Great point. The correction should be used to buy some good stocks. If the valuations are cheap there is chance for PE expansion. My own experience suggests retail investors do better by selecting stocks which are trading at low multiples. This does not mean high growth stocks do not do well, but the chances are much higher with a reasonably valued stock.

 

@bholu @Karthikeyan " bluechip stocks, available at cheap valuation " V.Good but there is no way to find Cheap Valuations ..

Agreed... Thats why I count relative PE to their three year average ... Say Berger Paints Av PE is 54 for their consistent Top 15% PAT 20% growth... When the growth is intact and if available at 40PE then it gives a chance ... apparently it does not look cheap though ...

 

Broadly agree with you that it is difficult to find cheap valuations as everything gets priced in, in no time. That being said, some well known stocks are available at very low prices, where downside seems limited. But price may consolidate more or less at this level for some more time, as we don't see any positive triggers for V shaped recovery right now. In my view, one can consider buying Axis Bank, ICICI Bank, State Bank of India and Tata Motors at every dip for long term.

 

which will be those bluechips that will be good in long term?

 

Yes you are right... We have to marry the Technical Analysis with the Fundamental Analysis ... Good companies bought at a Technically Opportune time only will reward... When market is in an oscillatory time correction mode to ward off the froth formed due to over anticipation ,,,

 

Axis Bank, SBI, ICICI Bank and Tatamotors.

 

i have still doubts on sbi - npa may rise . so waiting is better i think. be careful

 

Yes. NPA is a risk and I don't think SBI will spike up in the immediate future. But 150 looks like a decent support and can be bought around 150 and below for long term investment, if one is convinced that this NPA issue would be sorted out by March 2017. Price may visit 150 levels or may even go below a few times, while moving in a narrow range in the next few quarters, giving us opportunities to buy at the right levels.

With a PE of 9 at 150, don't see much downside. On the flip side, single digit PE in SBI is too hard a temptation to resist. If you look at it from 5 years' perspective, it would be at least a 2 bagger.

 

This where we have to take a strong view... PE 9 is very cheep but it does not guarantee PE 8 will not come in near future ...

Yes /// With a PE of 9 at 150, don't see much downside. On the flip side, single digit PE in SBI is too hard a temptation to resist. If you look at it from 5 years' perspective, it would be at least a 2 bagger. ///your assessment makes sense

 

is sbi dec 15 result out?