Which company has the potential to become next Infosys or Airtel or Suzlon or Praj? Visionary investors always search to find emerging giants which have the potential to yield more than 500% returns in 3-4 years. Many emerging companies generally get funding from PE players but still some companies opt for IPO route. If you pick the right stock, it will change your life forever. High risk and high return is the basic character of an emerging and niche Company.
Characteristics of emerging stocks:
1. These stocks have the potential to give exceptional returns if investors buy and remain invested in them for 4-5 years.
2. Risk is generally high as most of these sectors are in untested zone and converting ideas into viable businesses is a great challenge for enterpreneurs.
3. Some companies start with a good ideas but failed to execute them in time. Don’t expect that every company will become another Infosys or Suzlon or Praj Industries.
4. You should not look at balance sheets when you invest in them. That’s why value investors generally do not buy emerging companies. Learn to see bigger picture before investing in them.
5. These stocks are generally bought by foreign investors and highly educated investors which are now staying away from Indian stock markets. These stocks generally fall heavily in bear markets and will command very high valuations (P/E of 30-60) in bull markets..
6. These stocks are meant for patient investors who have the vision and ability to stay invested for long term.
Stocks in emerging sectors:
1. Solar energy: Read this article to know about American Government steps to boost Solar energy sector. When will Indian Government take aggressive steps in this space? This Government is obsessed with nuclear energy.
A. XL Telecom and Energy: Safe bet.
B. Webel SL Energy: Government control.
C. Moserbaer: This Company is an emerging giant.
D. Tata Power: Through Tata BP Solar.
E. BHEL and BEL: Benefit from solar boom.
F. ONGC, BPCL, HPCL, Lanco Infra, Videocon, Reliance Industries, Reliance Infra and Videocon: Mixed players.
G. Titan Energy:
H. SPEL Semiconductor
I. Jain Irrigation
J. KSK Energy.
2. Wind Energy:
A. Suzlon: Giant in this space.
B. Elecon Engineering: Mixed player.
C. Shriram EPC: Mixed player.
D. Indowind Energy:
E. Lanco Infra and Reliance Infra: will enter in future.
3. Bio-fuels:
A. Southern Online Biotech: Started operations.
B. IKF Technologies: Risk takers can bet on this scrip.
C. KSK Energy:
D. Praj Industries: Proven giant.
E. Tata Chemicals, BPCL, IOC, and HPCL: Mixed players.
F. Sugar Companies: Benefit in future due to ethanol blending.
4. Electric vehicles:
A. Tube Investments: Risk takers can buy it.
B. Electrotherm: leader in this segment and a mixed player.
C. Hero Honda and TVS Motors: Mixed players.
5. Water Management:
A. ION Exchange India: Rekesh Jhunjhunwala invested in the Company.
B. Jain Irrigation: Drip Irrigation.
C. Eureka Forbes:
D. Kirloskar Brothers, KSB Pumps and Kaycee Industries
E. Pratibha Industries, Hindustan Dorr-Oliver, IVRCL Infra, Subhash Projects and Thermax:
F. Bisleri and Himalaya: Mineral water players.
G. Sintex Industries: Mixed player but safe investment.
6. Waste Management:
A. Jindal Saw: Through Jindal ITF. This company may surprise analysts within 2 years. 2 billion target within 2 years for Jindal ITF.
B. Infotrek Syscom:
C. Subhash Projects and Management.
D. ACC- Mixed player.
7. Mobile Value added services (VAS): Tremendous value for long term investors.
A. On mobile: Leader in this space.
B. Tanla Solutions: Cheap valuations.
C. Geodesic Information: Internet niche.
D. Tulip Telecom: Mobile networks.
E. R Systems International: Mobile IPTV and IPLM Solutions.
F. Micro Technologies: GPS, Wireless Communications and Business intelligence.
G. Genesys International: GIS solutions.
H. IKF Technologies.
8. DTH players and HITS Technology:
A. Dish TV: Pure DTH player but increase in competition.
B. Wire and Wireless: HITS Technology.
C. Sun TV, Reliance Communications, Tata Communications, Bharti Airtel and Videocon: Mixed players.
9. Logistics: This sector is not an emerging play but has huge potential.
A. Global Vectra.
B. Larsen and Toubro
C. Container Corporation of India: Safe stock.
D. Sical Logistics, Gateway Distriparks, Blue Dart, GATI and many others.
E. Arshiya International: Keep a close eye.
F. Allcargo Global Logistics.
10. Contract Research and Manufacturing Services (CRAMS):
A. Divis Labs, Dishman Pharma, Nicholas Piramal and Jubilant Organosys.
B. Lupin, Glenmark and Dr Reddys Labs are emerging players in this space.
Niche players:
11. Smart cards: Bartronics.
12. Animation: Compact Disc India
13. Microwave and MIC: Astral Microwave
14. LCD panels: MIC Electronics and Moserbaer.
15. Plastics: Time Technoplast.
16. Semiconductor: SPEL Semiconductor.
17. Gaming: UTV Software and Compact Disc India.
18. Education: Educomp Solutions, Core Projects, NIIT and Everonn Systems.
19. Medical Diagnostics: Opto Circuits India.
20. Medical Research: Piramal life (high risk) is a safe stock than others.
21. Vaccines: Panacea Biotech, Biocon, Wyeth and GSK healthcare.
22. Nutraceuticals: Wockhardt, Plethico Pharma, Divis Labs, Merck and Dishman Pharma.
23. Food processing: Jain Irrigation, ITC, Nestle, Dabur and HUL.
24. Power solutions: ICSA and KLG Systel- Huge potential.
25. Ratings: CRISIL and ICRA- Safe business.
26. CNG space: Nitinfire Protection and Everest Kanto Cylinder. Closely watch Nitin Fire.
27. Seismic Tests: Alphageo.
28. Security: Honeywell Automation, Bosch and Zicom Security - Huge scope due to recent terrorist activities.
29. Floriculture: Karuturi Global.
30. Agriculture and Crop protection: Rallis, Advanta, Monsanto, Kavuri Seeds, Syngenta, Bayer Crop, United Phosphorus and Tata Chemicals.
31. Poultry: Venky’s.
32. Farm Equipment: Jain Irrigation, Kirloskar Bothers, KSB Pumps and Mahindra and Mahindra.
33. Packaging Innovation: Bilcare and Ess Dee Alluminium.
34. Nuclear deal: Areva T&D, Rolta India, Honeywell Automation, Alstom Projects and others.
35. Internet: IOL Netcom and Geodesic Information Systems.
36. Rural Electricity: Rural Electrification Corporation (REC).
37. Chloro-flouro carbons: Navin flourine International.
Note: I am just giving the list of stocks but not recommending them as safe investment options. Readers should do research on their business models (not on balance sheets) and management before investing your hard earned money in these stocks. I tried my best to prepare this list but any errors are regretted. I am requesting readers for more Stock ideas to make this list a more comprehensive one on the emerging companies.
My investment strategy:
I use 25% of personal money to invest in these companies (but not investment offers money). I generally buy small quantities in good emerging companies and gradually remove non-performers or unviable business models. I gradually increase holdings in good emerging companies and niche stocks. Limit your portfolio of emerging and niche stocks to 10-15 by the end of 2009.
Characteristics of emerging stocks:
1. These stocks have the potential to give exceptional returns if investors buy and remain invested in them for 4-5 years.
2. Risk is generally high as most of these sectors are in untested zone and converting ideas into viable businesses is a great challenge for enterpreneurs.
3. Some companies start with a good ideas but failed to execute them in time. Don’t expect that every company will become another Infosys or Suzlon or Praj Industries.
4. You should not look at balance sheets when you invest in them. That’s why value investors generally do not buy emerging companies. Learn to see bigger picture before investing in them.
5. These stocks are generally bought by foreign investors and highly educated investors which are now staying away from Indian stock markets. These stocks generally fall heavily in bear markets and will command very high valuations (P/E of 30-60) in bull markets..
6. These stocks are meant for patient investors who have the vision and ability to stay invested for long term.
Stocks in emerging sectors:
1. Solar energy: Read this article to know about American Government steps to boost Solar energy sector. When will Indian Government take aggressive steps in this space? This Government is obsessed with nuclear energy.
A. XL Telecom and Energy: Safe bet.
B. Webel SL Energy: Government control.
C. Moserbaer: This Company is an emerging giant.
D. Tata Power: Through Tata BP Solar.
E. BHEL and BEL: Benefit from solar boom.
F. ONGC, BPCL, HPCL, Lanco Infra, Videocon, Reliance Industries, Reliance Infra and Videocon: Mixed players.
G. Titan Energy:
H. SPEL Semiconductor
I. Jain Irrigation
J. KSK Energy.
2. Wind Energy:
A. Suzlon: Giant in this space.
B. Elecon Engineering: Mixed player.
C. Shriram EPC: Mixed player.
D. Indowind Energy:
E. Lanco Infra and Reliance Infra: will enter in future.
3. Bio-fuels:
A. Southern Online Biotech: Started operations.
B. IKF Technologies: Risk takers can bet on this scrip.
C. KSK Energy:
D. Praj Industries: Proven giant.
E. Tata Chemicals, BPCL, IOC, and HPCL: Mixed players.
F. Sugar Companies: Benefit in future due to ethanol blending.
4. Electric vehicles:
A. Tube Investments: Risk takers can buy it.
B. Electrotherm: leader in this segment and a mixed player.
C. Hero Honda and TVS Motors: Mixed players.
5. Water Management:
A. ION Exchange India: Rekesh Jhunjhunwala invested in the Company.
B. Jain Irrigation: Drip Irrigation.
C. Eureka Forbes:
D. Kirloskar Brothers, KSB Pumps and Kaycee Industries
E. Pratibha Industries, Hindustan Dorr-Oliver, IVRCL Infra, Subhash Projects and Thermax:
F. Bisleri and Himalaya: Mineral water players.
G. Sintex Industries: Mixed player but safe investment.
6. Waste Management:
A. Jindal Saw: Through Jindal ITF. This company may surprise analysts within 2 years. 2 billion target within 2 years for Jindal ITF.
B. Infotrek Syscom:
C. Subhash Projects and Management.
D. ACC- Mixed player.
7. Mobile Value added services (VAS): Tremendous value for long term investors.
A. On mobile: Leader in this space.
B. Tanla Solutions: Cheap valuations.
C. Geodesic Information: Internet niche.
D. Tulip Telecom: Mobile networks.
E. R Systems International: Mobile IPTV and IPLM Solutions.
F. Micro Technologies: GPS, Wireless Communications and Business intelligence.
G. Genesys International: GIS solutions.
H. IKF Technologies.
8. DTH players and HITS Technology:
A. Dish TV: Pure DTH player but increase in competition.
B. Wire and Wireless: HITS Technology.
C. Sun TV, Reliance Communications, Tata Communications, Bharti Airtel and Videocon: Mixed players.
9. Logistics: This sector is not an emerging play but has huge potential.
A. Global Vectra.
B. Larsen and Toubro
C. Container Corporation of India: Safe stock.
D. Sical Logistics, Gateway Distriparks, Blue Dart, GATI and many others.
E. Arshiya International: Keep a close eye.
F. Allcargo Global Logistics.
10. Contract Research and Manufacturing Services (CRAMS):
A. Divis Labs, Dishman Pharma, Nicholas Piramal and Jubilant Organosys.
B. Lupin, Glenmark and Dr Reddys Labs are emerging players in this space.
Niche players:
11. Smart cards: Bartronics.
12. Animation: Compact Disc India
13. Microwave and MIC: Astral Microwave
14. LCD panels: MIC Electronics and Moserbaer.
15. Plastics: Time Technoplast.
16. Semiconductor: SPEL Semiconductor.
17. Gaming: UTV Software and Compact Disc India.
18. Education: Educomp Solutions, Core Projects, NIIT and Everonn Systems.
19. Medical Diagnostics: Opto Circuits India.
20. Medical Research: Piramal life (high risk) is a safe stock than others.
21. Vaccines: Panacea Biotech, Biocon, Wyeth and GSK healthcare.
22. Nutraceuticals: Wockhardt, Plethico Pharma, Divis Labs, Merck and Dishman Pharma.
23. Food processing: Jain Irrigation, ITC, Nestle, Dabur and HUL.
24. Power solutions: ICSA and KLG Systel- Huge potential.
25. Ratings: CRISIL and ICRA- Safe business.
26. CNG space: Nitinfire Protection and Everest Kanto Cylinder. Closely watch Nitin Fire.
27. Seismic Tests: Alphageo.
28. Security: Honeywell Automation, Bosch and Zicom Security - Huge scope due to recent terrorist activities.
29. Floriculture: Karuturi Global.
30. Agriculture and Crop protection: Rallis, Advanta, Monsanto, Kavuri Seeds, Syngenta, Bayer Crop, United Phosphorus and Tata Chemicals.
31. Poultry: Venky’s.
32. Farm Equipment: Jain Irrigation, Kirloskar Bothers, KSB Pumps and Mahindra and Mahindra.
33. Packaging Innovation: Bilcare and Ess Dee Alluminium.
34. Nuclear deal: Areva T&D, Rolta India, Honeywell Automation, Alstom Projects and others.
35. Internet: IOL Netcom and Geodesic Information Systems.
36. Rural Electricity: Rural Electrification Corporation (REC).
37. Chloro-flouro carbons: Navin flourine International.
Note: I am just giving the list of stocks but not recommending them as safe investment options. Readers should do research on their business models (not on balance sheets) and management before investing your hard earned money in these stocks. I tried my best to prepare this list but any errors are regretted. I am requesting readers for more Stock ideas to make this list a more comprehensive one on the emerging companies.
My investment strategy:
I use 25% of personal money to invest in these companies (but not investment offers money). I generally buy small quantities in good emerging companies and gradually remove non-performers or unviable business models. I gradually increase holdings in good emerging companies and niche stocks. Limit your portfolio of emerging and niche stocks to 10-15 by the end of 2009.
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