As the markets zoom up, it’s getting very difficult to find stocks at bargain prices. All the low-hanging fruits have been plucked. This has forced ace stock pickers like Daljeet Kohli to go off the beaten path and look at the beaten down old-economy stocks.
Meghmani Organics is a good example of this. When the economy was in the doldrums, Meghmani took it on the chin. It was ravaged by the down cycle of the sector and its heavily leveraged balance sheet.
However, now that the economy is reviving, stocks like Meghmani Organics, available at a steep discount, can give you hefty gains. That is why Daljeet calls it a “classic turnaround story”. You can read his detailed report to come to grips with his rationale.
Meghmani’s MD, Natu Patel, supported Daljeet’s hypothesis by promising EBITDA of 20% and significantly lower debt levels by October 2015.
The stock is up about 17% since Daljeet’s recommendation.
Another stock in the same mould is Pennar Industries. This stock had also been ravaged by the downturn in the economy till Daljeet gave it a lease of life by putting a buy on it. Daljeet’s logic on why Pennar can be a winner is quite convincing and you should read it.
Daljeet has foreseen a 70% gain from Pennar Industries.
This stock is also up about 17% since Daljeet’s recommendation.
Daljeet has cautioned that there are risks attached to both stocks. In the case of Meghmani, a significant rise in input (H-Acid & Dye intermediary) prices means that all bets are off because the stock will go into a tailspin. In the case of Pennar, if the economy continues to remain sluggish, all projections of its prosperity will remain on paper. We must bear these risks in mind if we are thinking of tucking into these stocks.