These midcaps have fallen 10-40% from 52-week high but can give double-digit returns
Companies have been taking a hit on their margins due to rising prices of commodities, rupee depreciation, and high competition
While the benchmark index, S&P BSE Sensex, has dropped about 9 percent from its record high that it hit in August, many mid-cap stocks have fallen by about 40 percent from their respective highs.
High valuations, liquidity concerns, a rise in commodity prices and weakening rupee resulted in a sharp correction in the mid-cap names in the recent past.
Motilal Oswal has shortlisted 10 stocks that have fallen up to 40 percent from their 52-week highs but still have potential to give 10-90% return in the next 12 months.
In terms of valuations, midcaps have moderated slightly which will give comfort to long-term investors to get into quality stocks on declines. Now that valuations are close to be reasonable, the two main factors to be considered in picking stocks in the broader market are earnings growth and stability of earnings.
A company which has steady and consistent earnings growth over time even during times of economic difficulty and market upheaval can be good bet for the future. Investors who got stuck in this correction are advised not to compromise with quality while reviewing their portfolio.source- www.moneycontrol.com
The selection criteria for investors could be a mix of technical as well as fundamental factors. It is important to understand how the prices are moving, and fundamentally how the company does its business and earnings potential.
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