Investing in stocks can be emotionally difficult, because it means one has to be actively involved to generate high returns, earn profits and get an ego boost out of the same. When the markets are on the rise, investing in stocks can be easy, because nine out of ten turn out winners. The real challenge one faces over market cycles is in selecting stocks that can turn into winners.
Since the July 2011, anniversary issue of Wealth Insight magazine, we featured 46 stocks, which included 16 large- and mid-cap stocks each and 14 small-cap stocks. These stocks made the cut only after passing through our stringent stock screen filters. However, a lot has changed in the past one year both politically and economically. These changes have impacted the stock markets, making it a challenging prospect for us to relentlessly work towards stock selection that stand the test of times.
To check and demonstrate our stock picking skills, we evaluated the performance of these 46 stocks. If one had invested Rs 10,000 in each of these 46 stocks, when they were recommended a net investment of Rs 4.6 lakh; it would be worth Rs 4.88 lakh as on June 30, 2012, which works to an IRR of 9.17 per cent. Compare the performance of this set with the Sensex and the results are stark. Investing a similar sum in the Sensex would have resulted in capital erosion to Rs 4.56 lakh with a negative IRR of 0.97 per cent.
Did all the 46 stocks suggestion work? No. It did not and it cannot. Stock markets factor in several factors, which need to be reviewed continuously. It is for this reason that you will not find 46 stocks but 39 of them in the list. Some, no more pass our tests and filters like Brigade Enterprises, Peninsula Land, Graphite India, Transformers & Rectifier, Gabriel India, Rural Electrification Corporation and Gujarat State Petronet Ltd which is facing tariff related regulatory problems. What you can gain by investing in these stocks is the insight we bring to build wealth.
In the following days we will feature two stocks every day with its price movement over the past one year, key financials of each stock, our recommended price when the stock was featured and the current losses or gains in them, including our view on the stock.