RSS

Tag Archives: Penny stocks

Best Penny Stocks in India 2017-2018 in NSE-BSE Buying/Investing in penny stocks Good or Bad

ou have found some stocks trading at just Rs.5 or 10. What an opportunity? There must be blind people to leave these stocks unnoticed. I will profit from them. It can easily double or triple.

If this is your thought then that is exactly ‘Penny Stocks Investing‘. But is this rational? Let us find out….

I have a friend who bought a lot of Birla Power Solutions and Jupiter Biosciences in 2009. These were really hot penny stocks in late 2008. Let me tell you that he regrets his decision now. They have gone way down.

Are you gung ho about buying top penny stocks? You’ve made up your mind already? While I would certainly advice to invest in top quality stocks, here are a list of top low cost shares to invest in 2017-2018. How did we select them? The criteria we used for choosing best penny stocks was…

We made sure they’re not companies that vanish overnight. They must have been around a few years
They may not strictly be penny shares but border around them. Ie., each shares costs less than Rs.25 and market Cap less than 500crores
Their products/services must be real and visible
Must have some downside protection in short-term
Promoter holding must be 40% minimum
By this way we can at least make sure to screen the majority of bad companies (which most penny stocks usually are). Here is the list of top penny shares in India that meet above criteria

SL.No Penny Stock Name Price Market Cap(in Crores) P/E Ratio P/BV Div Yield(%)
1 IL&FS Invest. Mgrs 22.4 720.1 13.1 6.95 5.65
2 JVL Agro Industries 16.9 287.1 4.3 0.61 1.17
3 NeoCorp International Ltd. 15.4 59.3 3.01 0.23 3.21
4 Genus Power Infrastructure 25.3 678.2 11.21 1.22 0.38
5 Vijay Shanthi Builders 13.8 36.4 7.85 0.3 5.76
6 Manali Petrochemicals 10.7 184.3 5.92 0.87 4.66
7 Nitesh Estates 13.9 203.3 21.4 0.47 0
8 Manappuram Finance 67 6400 10.2 2.13 2.7
9 Lycos Internet 18.5 881.2 2.21 0.48 0.0
1) IL& FS Investment Managers – This is a very good company managed by IL&FS group. They are involved in Private Equity business and are the only listed PE firm in India. IL&FS has a strong brand equity. The last value of stock was around Rs.21 . It gives a very good dividend and has no debts. While you cannot expect it to triple or quadruple in next year, it is somewhat a decent stock to buy in at low cost per share.

Update: This penny stock paid Rs 1.3 as dividend ie., 7% of cost price. It is also down by Rs.2. The decent fundamentals are still intact.

2) JVL Agro Industries – It has a Market Cap of around Rs.200 crores and trading at around Rs.15 per share. It has P/E of 4 and book value of Rs.15. JVLis the largest single in-house manufacturer of Vanaspathi Oils. It has a dividend yield of around 1.5%

Update – This penny stock has moved from Rs 16.9 to Rs 20.5. Not great performance but not bad either.

3) NeoCorp International Ltd – Neo Corp is a packaging provider expecially in textile manufacturing. It manufactures under PackTech brand. It has a market cap of around Rs.60 crores and per share costs around Rs.15. The PE ratio is close to 2 and dividend yield is 4%.

Update:The market cap of this penny stock has doubled in last one year after featuring first on our list. It now trades at Rs31.

4) Genus Power Infrastructure – This is one of the leading electricity meters manufacturer in India. Have moderate debt on their books. The stock costs around Rs.21 and the market cap is around Rs.500crore. The PE ratio is around 9 and promoter holds around 50%. Earns around Rs70 crore profit every year. Decent fundamentals.

Update: This penny stock has gone up to Rs 46 now from Rs 21 when we first listed it. More than doubled.
What are Penny Stocks?
Penny stocks are shares of companies that have market capitalization (market capitalization-the total value or worth of the company) less than Rs.100 crore and each share trading below Rs.10. Do you know how many penny stocks trade on BSE or NSE. It’s 25% for the BSE and 10% for the NSE.

They look like a good grab as the downside seems limited. Penny stocks usually belong to companies with low quality management or negative future outlook. These penny stocks suddenly spring to life with huge volumes when there is an announcement or turnaround in the market.
Why are penny stocks cheap?
Most Penny stocks are cheap for a reason. It is mainly because

They have a low quality management
Non-transparent corporate governance
bad future business potential
Bad balance sheet and bad profit/loss account
Penny stocks usually seem to belong to dubious promoters. These promoters sell their unworthy financial companies during the peak period. Once they have off loaded their junk, they slowly disappear from the light. The investors then get stuck with the bad investments.

How do penny stocks operate?
Penny stocks usually have a promoter-operator nexus. The promoters usually hire investment bankers (low reputed mostly). These people in turn negotiate a deal with the operators who buy and sell shares anonymously with fake accounts. During boom times, people are ready to buy anything.

These operators carefully create a media frenzy or approach individual investors by mail/phone. They artificially push up prices and then offload these equity shares to investors. The profit is then shared between the promoter and operator.

Investors would have no idea as to what or how much shares were insider traded nor how long stocks were held. How many of you read the News and Announcements from BSE/NSE before buying penny stocks?
Risks in Penny Stocks

You buy a stock thinking it will go up in future. If it has a stealthy management, you do not know its real profits. Will you lend to a friend who lies all the time? It is something similar to that
There is a chance to lose 100% – The promoters can never return and your stock value goes from Rs4 to Rs 0. Yes it is a 100% loss.
Your stock may be de-listed – BSE/NSE once a while, delists penny stocks to clear the bourse. Once it is de-listed you do not have chance to sell it.
The trade volume value is too thin – You do not get a chance to exit as the value of shares traded is not uniform. It is big on some days and then zero on others. You cannot exit when you want.
Penny stocks are not traded widely. Some may be only delivery-based and not intra-day trading.
Penny stocks in India are not regulated. Most of them run risk of being delisted by bourses as seen in recent months due to low quality. Liquidity will be an issue for such penny stocks as you can’t sell them. So be careful on which stock you buy.
Pros of penny stocks:

If identified properly, the rate of return is huge. As high as 200-500%
Some quality companies , due to temporary hiccups and bad environment end up as penny stocks. Once market and economy turns they bounce back giving super-normal returns.
They are cheap. So you can buy large quantities.
How to trade penny stocks
If you have decided to get involved in penny stocks, make sure you follow these tips. This will help you avoid the major blunders that penny stock investors make.

Don’t trade OTC stocks. OTC or Over -the-Counter stocks are not well regulated as regular listed penny stocks
Do own analysis and discard email/sms which promise you the next million in trade. They make you gullible targets
Look for momentum in the stock. Learn some basic technical analysis.
Try not to short penny stocks. They usually lead to losses unless you’re well aware of technical analysis and insider/market information
Always have your stop losses in place. Don’t invest more than 5%of your total stock portfolio in a penny stock
Choose high volume stocks. The total quantity of stocks traded each day must atleast be 10-15 times what you plan to buy. There is no use buying a penny stock which you can’t sell.
Don’t buy penny stocks just because they’re cheap. Look for decent fundamentals atleast. May not be even greta or good but the penny stock should not be fraud or bad which is case most of time.
Check if the business of the penny stock company is turning around or will turn around. Avoid loss making companies that reported loss for 2 0r more years. Should have visible signs of recovery. Else there is no trigger for the penny stock. Do you know Marksans Pharma, Uniply industries were penny stocks in India once trading at 5rs each. now they trade Rs 100 and Rs 700 respectively.
Don’t try to average the price of a penny stocks on its way down.
Don’t have 50 penny stocks. If you invest in penny stocks then better to have less than 5 or 10 so that tracking is easy.
Following the above measures will protect the downside of your investment. If there is a mistake,then you can book a loss without losing 100% capital if you’re alert.

 

Tags: , , , ,

10 Steps To Become An Expert Investor

We all know that investing in equities is the key to building long-term wealth and becoming rich. However, it is important to remember that not all stocks are created equal. While mid- and small-caps do have the potential to generate high returns, large caps do offer stability to your portfolio. But this does not mean you should ignore any of these stocks.

So it is essential that you should benefit from the high growth offered by mid- and small-caps while enjoying the stability offered by the large caps. Also note that mod caps and small caps faces wild swings in stock market and lot of midcaps become small cap in  a matter of few days and small caps just vanishes with no trace or no buyer and you are left with all the dud stocks of the world.

Remember that nobody is an expert investor; even Warren Buffet lost pots of money in 2008 meltdown.

Be strict with your stop loss. It means when you are losing money, cut your losses and get out of the market. Similarly, if you are on a winning spree, setting a proper stop loss will protect your profits when the stock markets start going down. But it is difficult to face the wild swings in the stock markets in volatile times. Your stop loss is triggered and stock again goes to upper circuit and you are left with huge losses.

Learn whenever you suffer a loss. We lose money in the market due to our mistakes. Find out where you went wrong and ensure you don’t repeat it.

Avoid greed. It is easy to put money in a dud stock just because it is going up. You might be in a hurry to whip up some quick money for a down payment for your home loan or the down-payment for a new car hitting the roads. However, be wise and remember this price rise is due to market manipulation rather than any genuine change in the company’s financial situation. Also, understand that to reap the best benefits you need to stay invested in a good stock for a long term.

Avoid leveraging. Many people borrow heavily from others in order to maximize their profits. Though this may work in certain instances, it can also cause massive losses if the market cycle turns. This can lead to financial as well as mental stress, and can lead to destruction of family lives as well as suicides in certain instances.

Don’t act if you are not sure which way the stock markets will move. In such instances, it is better to be a passive onlooker instead of participating in the market action.

Read a lot. There are many good books on investing available on the subject. Always keep on updating your knowledge. Also follow thoughts and opinions given by respected investors like Warren Buffet, Rakesh Jhunjhunwala, etc. It will expand your knowledge and help you tackle any market situation comfortably. But also remember they are big guys and you a just a small fry so when you lose its huge and when they loss you will rarely get to know that why his firm is known as Rare Enterprise.

Limit the number of stocks. Ensure your holding comprises not more than 20 stocks. Also ensure these stocks are from companies operating in different sectors to protect your portfolio from losing its value. I always suggest stay with the top class stocks with high quality and I have seen that there are less risk involved in case of large caps. Comparatively mod caps and small caps are dangerous and should not be 5% of your portfolio.

Don’t use various investment strategies. If you are comfortable with buy and hold strategy, use the same one for all your stocks. Otherwise you might be confused with which strategy actually helps you make money.

Remain patient and disciplined, whatever the market condition. If the markets are crashing don’t get out of the market, but wait for the market to go up. Also don’t continue to invest in the stock simply because it is going up.

Choose stocks as per your risk profile instead of the returns they generate. If you are not comfortable with the high volatility of the small- and mid-caps, don’t invest in them. I always avoid small caps and mid caps and stay with large caps with good liquidity and excellent management.

Don’t ever think that you are the master of the market , if you are not confident or comfortable there are other secure ways like mutual funds and SIP which pays good money in a horizon of 5-10 years. I have written about the good options among mutual funds where you

get handsome returns in longer term.

 
Leave a comment

Posted by on July 16, 2013 in Uncategorized

 

Tags: , , , , , , , , , , , , , , ,

10 Reasons Why You Are Losing Money in The Stock Market

Stocks can help you pick up longer-term growth but if you can’t handle the wild swings in price and continue to make emotionally charged decisions with your stock investments then maybe you shouldn’t invest in them in the first place.

Unfortunately, there are plenty of investors who got scared when the market sold off in 2008 and bailed out close to the bottom of the market. They probably told themselves that they would wait until things got better to get back into stocks. Now that the economy is slowly improving and stocks have performed well they are telling themselves it’s all clear and time to invest again.

This strategy is a great way to lose money. Stay with it long enough and you will be broke in no time.

A better option is to come up with a disciplined investment plan and stick to it. Automate good behavior so you don’t allow emotions to come into the equation. Figure out your ability and willingness to take risk and go from there.

Do you feel that you are losing a lot of your money in the stock market? Well in this case you should try to understand the reasons behind it. You have to be very well acquainted with the different shares that are present in the market. Unless you are able to take your own decision carefully in the market, making the right and maximum profit would still remain as a dream for you. So it is important to know what is going wrong with you or with the shares and stocks that you are investing. You have to give good concentration in the market and avoid taking any haste decision to invest in the stocks. If you are able to get the right information on what is really happening in the stock market then you would not have to worry for your money that you have invested in it. There might be many reasons for not being able to get the right amount of money from the market. So let us have a look at the 10 reasons why you are losing money in the stock market.

1. Low confidence
One of the most important things that people fail to do is to keep their confidence high in the market. They already have the thought that they would lose their money in the stock market. So keeping in view of this they are not able to get the right profits from the market.

2. Invest more
Another important blunder that they commit is that they try to invest as much money as possible in the stock market. This is very bad and it never helps you to get the right amount of profit from the stocks that they invest.

3. Takes advice from ignorant friends
Many investors try to seek help or guidance from their friends as a result of which they are hardly able to make any good profits from their investment. They get all the outdated information of the stocks from them which results to a heavy loss.

4. They make prediction
Prediction is not at all possible in the stock market and so if you try to make any guesses about the stock market then this would be a huge mistake leading you to lose much of your money. 

5.  They want to get rich quickly
There are many traders who try to get rich quickly in the market. So they try to make huge investment in the market without thinking of the consequences. So at the end of the day they lose their money.

6. Lack of patience
Impatience can never lead you to make the maximum profit. If you think that you have the right patience to wait for the best time to invest then you can always be able to make the right income. You should always keep in mind that patience count in the market.

7. Lack of good research
If you think that research is not very important for you to get the right stocks then you are very mistaken. It is important that you need to get some good research done to make the profitable income from the share market.

8. Getting outdated information
If you get all outdated information of the market then you would have to lose your cash. You should therefore try to get the latest happenings in the stock market to get the right amount of profits.

9.  Not knowing the risk level
If you do not know the level of risks involved in a particular stock then you would be in a huge loss. This would also make you bankrupt and you would think that there is no hope in the market.

10. Getting the wrong source of information
If you are not able to get the best source of information then this can also affect you a lot financially. In order to make the best profits you need to get the right source for your profit.

 

 

 
Leave a comment

Posted by on July 16, 2013 in Uncategorized

 

Tags: , , , , , ,

 
%d bloggers like this: