Fundamentally sound stocks generally perform better in these troubled times. 5 best stocks to buy picked here are from sensex and for those who prefer to invest in index large cap stocks. Long term investors should accumulate these stocks to get 60-80% returns in one year. Keep some cash to accumulate more on any unexpected fall.
5 best stocks to buy from sensex for long term investment horizon:
1. Larsen and Toubro (L&T):
This is the best stock in Sensex for long term investors. L&T surprised analysts with their better than expected results. But stock still underperformed to bad market sentiment. As L&T entered into niche areas, margins will improve in the coming quarters. Upcoming demergers will improve L&T valuations in the coming quarters. Huge order book is another plus point. Announcement of bonus is a near term trigger after current turmoil.
CMP: 2,564. EPS: 74.3 P/E: 34.5
Expected EPS for FY2009: 105-110.
Ideal entry price: 2,350-2,400.
1 Year target: 3,600-3,800.
Best investment duration: 3 years to get wonderful returns from this giant.
2. ICICI Bank:
Real strength of ICICI Bank lies in their subsidiaries. ICICI securities IPO is a near term trigger.
CMP: 733. EPS: 37.3 P/E: 19.6
Expected EPS for FY09: 48-52.
Ideal entry price: 660-680.
1 year target: 1150-1,250.
3. State Bank of India (SBI):
Attractive valuations but unpredictable government interference.
CMP: 1,249. EPS: 106 P/E: 11.7
Expected EPS: 135-140.
Ideal entry price: 1050-1100.
1 year target: 2,000-2,200.
Best investment duration: 18-24 months.
4. Reliance Communications:
Another “Must buy” stock for long term investors if they don’t overly paid for acquisitions. Reliance Infratel IPO is a short term trigger.
CMP: 491.6 EPS: 12.5 P/E: 39.2
Expected EPS for FY09: 25-28.
Ideal entry price: 470-480.
1 year target: 750-800.
5. Reliance Industries:
This stock holds enormous intrinsic value. Reliance will give good returns for patient shareholders who invested for long term. Kakinada gas will change fortunes of shareholders in short term. Invest in Reliance; believe in Ambani; forget about it.
CMP: 2,100 EPS: 138 P/E: 16
Ideal entry price: 1,800-1,900.
1 year target: 3,000-3,200.
Duration: Invest for 2-3 year to get complete benefits.
Infosys, Bharti Airtel and Grasim are good stocks to get safe moderate returns in these difficult times. Fortunes of DLF and M&M will depend on inflation. Recent salary hikes may hit the balance sheets of companies like BHEL. Tata Steel is best underdog stock for FY09. We will get more clarity on these stocks in the next quarter results.
