This is the time to go out and buy Strong Established Mid Cap Cos
First, we have to compliment Sandip Sabharwal because in June 2018, when the markets were sinking like a stone and novices were cowering in fright, he sent the clarion call that the time is ripe to buy top-quality mid-cap stocks which were quoting at bargain basement prices.
He also rightly pointed out that the “perception of risk” is greater than the “actual risk” and that we should take advantage of the all-pervasive fear to aggressively buy stocks.
This is the time to go out and buy
Strong Established Mid Cap Cos
Fallen 25-50% from the top
Have improving business outlook
Downside in many such companies is limited now and upside potential higher.
Remember ACTUAL RISK & PERCEPTION OF RISK move inversely.
— sandip sabharwal (@sandipsabharwal) June 28, 2018
Needless to say, in the short period from June to August 2018, the perception has changed significantly.
Stocks are now surging like rockets and are nowhere near the bargain basement prices that they were in June 2018.
In fact, the Nifty has posted an impressive increase of 525 points despite surging crude oil prices and a plunging rupee.
Bulls seem to be recollecting Metallica’s ‘Nothing Else Matters’
Nifty +525pts this Aug 2018 series
— Nigel D'Souza (@Nigel__DSouza) August 30, 2018
However, there is still residual fear in the markets and we can take advantage of that if we move fast.
According to Sandip Sabharwal, many high-quality mid-cap stocks are still quoting at bargain basement prices in relation to their growth fundamentals and earnings potential.
He has also opined that there is likely to be a “major shift” and mid-cap stocks will storm back into favour by November 2018.
It is explicit from this that there is no time to waste and we have to grab the stocks ASAP.
A large number of strong Mid Cap companies went up with strong volumes today.
Start of trend towards broader markets performance.
Many Mid Caps quite cheap relative to growth fundamentals
— sandip sabharwal (@sandipsabharwal) August 21, 2018
A major shift in action in the markets towards Mid Caps likely from here till November. Watch on.
— sandip sabharwal (@sandipsabharwal) August 29, 2018
Which are the best mid-cap stocks to buy?
It is one thing to give clarion calls and it is another thing to recommend specific stocks.
Thankfully, Sandip Sabharwal has not left us hanging in mid air.
Instead, he has recommended three high-quality mid-cap stocks which are ripe for a buy now.
(1) L&T Finance Holdings – fulfils AM Naik’s solemn promise
Old timers will remember the golden days of October 2016 when AM Naik, the legendary chief of L&T, had personally looked us in the eye and assured that he would take remedial measures which would send the stock price of L&T Finance Holdings surging.
His precise words are worth recollecting:
“We made some changes in L&T Finance and it is now on track to growing return on equity. This will drive share prices more and it will cross Rs 100 in three-four months and Rs 150 by December next year. Anything that grows well, can manage well, can compete well and can have interlinking businesses with the rest of L&T, is core
In the last one year, it has done much better. The stock has performed very well. It has doubled in one year. I have no doubt in my mind that next year, with the kind of focus that they have on the Return on equity and a number of other initiatives which have been taken, reconstitution of the management, new CEO has come whose focus is on return on equity, I have no doubt that the stock will move up considerably in the coming twelve months”.
Unfortunately, instead of taking the promise made the legendary corporate titan in the right spirit and acting upon it, some novices got their knickers in a twist and fumed about why AM Naik was talking about the stock price of his company.
Some even threatened to “complain to SEBI”.
Anyway, after that, Billionaire Harsh Mariwala, the visionary founder of Marico, stormed into L&T Finance Holdings.
Mariwala also looked us in the eye and assured that we can invest our life savings in the Company without any fear.
— CNBC-TV18 (@CNBCTV18Live) December 30, 2016
— CNBC-TV18 (@CNBCTV18Live) December 30, 2016
It is notable that the stock has more than doubled since then.
They say the chairman is the best analyst of a stock and thats true for L&T FINANCE HOLDINGS LTD. atleast…TP came early 😉
— Nigel D'Souza (@Nigel__DSouza) October 14, 2016
L&T Finance Holdings is also one of Sandip Sabharwal’s old favourites.
He had first recommended the stock in August 2016 (along with two other mid-cap stocks).
It is obviously that there is a lot of gain waiting to be harvested from L&T Finance in due course of time.
(2) Kajaria Ceramics – recovery in sight
Kajaria Ceramics is presently in the doldrums owing to the slow-down in the real estate sector after demonetisation.
However, it has been a powerhouse wealth-creator in the past with multibagger gain of 300% gains in the past five years.
Indications are that the stock is now recovering its mojo.
According to the latest news, the Company is foreseeing volume growth of 12-15% in FY19 with margins of 16%+, which is quite reasonable.
Kajaria Ceramics to CNBC-TV18
Maintain Guidance Of 12-15% Volume Growth In FY19
Taken Price Hike Of 2-3% In Ceramic Tiles; Will See 16% plus Margins in FY19
Bathware Revenue was `155 Cr In FY18; will see 40-45% Growth & break even in FY19@KajariaCeramic https://t.co/F1U0Efcbd6
— Mangalam Maloo (@blitzkreigm) August 30, 2018
Sterlite Technologies – unstoppable juggernaut
Sterlite Technologies has been a mega wealth creator in the past and is expected to do so in the future as well.
The return over the past five years is a mind-boggling 1862% (18-bagger).
The return over the past 24 months is 324% while the YoY return is 65%.
Apparently, there is insatiable demand for cables in India and Europe to fuel the burgeoning 4G and 5G data consumption.
— IIFLMarkets (@IIFLMarkets) July 20, 2018
Sterlite Technologies bags Rs3,500 crore project from Indian Navy https://t.co/RU6a67pWC0
— Livemint (@livemint) February 26, 2018
— Firstpost (@firstpost) February 26, 2018
Sterlite Technologies' Anand Agarwal on the Italian acquisition, data boom and more.
— BloombergQuint (@BloombergQuint) July 11, 2018
Sandip Sabharwal has claimed to have pocketed impressive gains of 760% from the stock.
Our Long Term Investment Call Praj Industries now up 140% from Cost
Sterlite Technologies up 760%
Buy right and sit tight
All performances under Performance drop down on the website
— sandip sabharwal (@sandipsabharwal) January 11, 2018
Edelweiss has foreseen a target price of Rs. 425 for Sterlite Technologies.
Prima facie, it does appear that each of the three recommended stocks is a powerhouse and we can consider tucking into them slowly and steadily, whenever there are dips!