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10 HIGH RETURN & LOW RISK Growth Stocks. How to find Best Stocks to buy now for Long term investment - YouTube
Channel: StockAdda with Janak
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In this video, I am going to discuss 10 such large-cap and mid-cap
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which provide high returns with low risk
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I have used the concept of alpha and beta to consider these stocks
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In our coming video, we will discuss a bit more about this concept
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Now let's start with our discussion on growth stocks
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Our 1st stock idea is a retail consumption story
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which has given an average return of 54% CAGR to its investors in the past 3 years
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Its profits have increased by an average of 28% CAGR
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This stock is Dmart
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Now let me introduce you to the concept of alpha and beta
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Alpha indicates how much the stock has performed better than its index, here ie. Nifty
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Nifty has given a 17% CAGR return on average in the past 3 years
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and Dmart has given a return of 54% CAGR in last 3 years
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This extra outperformance of 37%
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is called alpha
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Beta shows how volatile the stock is as compared to the Nifty
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If the value of beta is less than 1
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it shows that this stock is less volatile than Nifty
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In case of Dmart, its Beta is around 0.42
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and because of its high alpha and low beta is is a high return, low-risk story
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Currently, Dmart is trading at a PE multiple of more than 200
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Which I personally think is expensive
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So here any correction can provide a good opportunity for longterm
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SIP as well is a good strategy to minimize your risk
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So if you have dmart in your portfolio then do like this video
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2nd stock idea is an IT giant with 3lakh crore of market cap
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This stock has given on average a return of 29% CAGR
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If I compare it with Nifty's 17% CAGR
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we get an outperformance of 32%
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Its beta is around 0.84
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which shows that its risk prospects are also good
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This stock is HCL technologies
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However, it hasn't given great results as compared to its industry
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and so it is at a PE OF 27
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If I compare it with TCS and Infosys
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they are trading at a PE of 35 and 36
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The first thing that makes HCL attractive is its valuations
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also, it has a strong deal pipeline
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In the previous HCL has made 14 new deals
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of 2200 million dollar+
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this deal is promising for its coming quarters
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We are also going to discuss an IT as well as AI-driven company
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Our next stock idea is from the infrastructure sector
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and its market cap is around 2lakh crore
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It is a market leader and has its presence in North, east, west
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and south
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They have 26% of the market share in cement production
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and I am talking about Ultratech cement
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It has given a return of 24% CAGR as compared to 17% of Nifty
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So here its alpha is around 7%
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15% of ROCE
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operating profit margins of 25%
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and a debt to equity of 0.33
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11% of free cashflow generation on invested capital
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shows how financially strong the company is
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Our next stock is an FMCG Giant
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and a market leader in its category
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having 66% pf infant food market share
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63% of chocolate market share
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70% market share on condensed milk
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and 69% of market share in noodles category
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I am talking about Nestle India
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It has given a return of average of 23% CAGR to its investors
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It is not that great when we look at 17% of Nifty
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But FMCG is traditionally a defensive sector
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which is least affected by market crashes
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Its bets=a is around 0.24
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This clearly shows that it's quite less volatile as compared to Nifty
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It has been a consistent compounder for since last 10 yrs
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It has more than 100% of return ratios
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25% of operating profit margin
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It generates 93% of free cash flow on its invested capital
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which clearly shows that their business is phenomenal
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Insurance is an underpenetrated industry in India
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Only 1% of GDP goes to the payment of premiums
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In developed economy it is around 2%
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In a country like US, it is around 9%
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In the years to come the increasing financial awareness
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rising disposable income
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and rising healthcare expenditure
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will give a boost to the insurance sector
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This stock that I am talking about is ICICI Lombard
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It has given on an average 23% CAGR return in last 3 yrs
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as compared to 17% of Nifty
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Its beta is around 0.64
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and its profits in last 3 yrs have increased by 36% CAGR
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However, this stock was under pressure due to covid
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It provides an exciting opportunity for longterm
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Last year due to covid there has been a major change in the pharma and API industry
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This stock operates in the API segment
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It provides main ingredients to the pharma companies
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along with this they also have a custom synthesis verticle
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This company is not in the space of formulations
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and that is why it does not compete with its pharma clients and costumers
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In last 3 yrs it has given a return of 46% CAGR
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This is a significant outperformance as compared to 17% of Nifty
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Its beta is around 0.27
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which shows a great stability
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This company is Divis Labs
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Operating profit margin of more than 40%
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A debt-free business and more than 30% of ROCE
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These are phenomenal numbers
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Right now API is facing challenges in terms of raw material
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and in such a challenging environment, it has shown a QoQ growth
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It is important to note that because of strong performance it is trading at premium valuations
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No doubt that there are valuation concerns
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but any correction or SIP provides an exciting opportunity for longterm
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Our next stock idea is a midcap IT company
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which is constantly increasing its market cap
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In the last 10 years, it has constantly shown double-digit sales and profit growth
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In last 11 years, int profit has increased from 200crs to 1200crs
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In the past 3 years, it has given 81% CAGR return
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In the same period, Nifty midcap 100 has given a return of 22% CAGR
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So this has an alpha of 59%
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its beta is around 0.89
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This company is Mindtree
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However this stock is also trading at premium valuations
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But its strong fundamentals indicate
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a good opportunity in case of any correction or SIP
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Now let's talk about the future themes
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like 5G, AI, Artificial intelligence
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So any investor can either invest in any of these themes individually
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or invest in such a stock that works in all of these themes
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We are going to talk about such a stock which is Larsen and Toubro technologies
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This stock has given on an average 52% of CAGR return
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This is a significant outperformance as compared to 22% of Nifty midcap 100
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Its beta is also around 0.91
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Because of this its prospects become exciting
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LTTS is currently at a PE of 68
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So this might be expensive for us standalone
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But if compare it to Tata elexi
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which is at a PE of 90
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and Happiest Minds which is at a PE of 118
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Here definitely there is a relative comfort
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The algorithm of Youtube also works on AI
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So if your portfolio has any AI stock then do press that like button
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which will indicate the algorithm of youtube
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The auto sector has been a serious underperformer for a few years
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But I am going to discuss a stock that has given a return of 35% CAGR in last 3 yrs
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It has an alpha of 10% when compared to 22% of Nifty midcap 100
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its beta is around 0.94
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and I am talking about Balkrishna Industries
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it is into the business of off-highway tires
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and they have a revenue of 78% from exports
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It has more than 20% of return ratios
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OPM of 29%
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Debt to equity of 0.24
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48% of profit growth in last 12 months
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This shows how this company is financially well-off
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Previous its total sales volume was around 2.27 lakhs mt
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This time it is around 2.87 lakh mt
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So this is quite a bullish indicator
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and because of its strong fundamentals you can definitely explore this stock
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Disclaimer: This video is not a recommendation
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and it is only for educational purpose
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so please consult your financial advisor before any investment decisions
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Our last company has a 40k cr marketcap
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in agrochemical sector
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Their significant business comes from exports
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Recently agrochemical sector has been disrupted due to supply chains
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also due to erratic monsoon conditions, it is under pressure
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But in such a challenging time as well it has given a YoY revenue growth of 17%
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and 615 of YoY PAD growth
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It has given a return of average of 52% CAGR to its investors in last 3 yrs
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Their alpha is around 30% as compared to 22% of Nifty midcap 100
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their beta is also around 0.86
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which indicates less volatility
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This company going ahead is targeting growth via acquisitions as well
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This stock is PI industries
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It is targeting API pharma segment in the future
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where they can provide custom synthesis
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So its overall indicators are quite positive
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It will be interesting to watch out how it pans out its pharma expansion
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It might not be an easy pull out for them
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But if it is able to execute it successfully
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then it can be a potential game-changer
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Just like this company we have covered another
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Midcap agro company which is Sumitomo chemical
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Its fundaments are also quite strong
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You will definitely like that video as well!
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