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Sunday, September 26, 2010

Gujarat Ambuja Exports: Hold on to your cheap stocks


Gujarat Ambuja started the week on Sept 20,2010 at 30.00 and closed week ending Sept 24,2010 at 35.00 an increase of 16.66% in one week.
GAEL stock also hit a new 52 week high of 35.85 .. one must remember that 35.90 was the circuit limit for Friday Sept 24,2010. The question in our minds is:

1. What is the next step?
2. When do we exit?

The next step for investors who are already invested in GAEL is "HOLD" "HOLD on to your cheap stocks"
To buy GAEL below 38 is the best investment decision made .. now we have to hold on to our emotions and not over trade. I am sure some of you have been trading in and out of GAEL stock. My own personal experience is that trading for short term is not a very successful activity.

Promoters buying generally is for returns greater than 300% so we can be assured that GAEL stock can easily cross 100+ in 12-18 months time frame. The important question is do we have the ability to hold the stock in its journey from 35 to 100? GAEL stock will definitely experience volatility of 30% or more and days when we will be pushed to sell .. Rest assured GAEL stock should not see levels below 30 which would be an excellent opportunity to buy ..

I personally have had bad experience trading stocks for short term.. and would not encourage people to trade short term however as per candle sticks GAEL is a hold ..

Points to be kept in mind:
- GAEL Current Market cap is: 484Cr
- GAEL Year ending March 2010 Gross Profit is 117.50Cr
- GAEL is a company with book value of 30.39 for a share of Rs 2 Face value.
- Long Term Debt is only 13.83Cr
- Average ROCE is strong 14.99% for past 5 years
- Cash in hand of 28.16Cr (March 2010)
- 40Cr worth of quoted securities.
- Promoters are still accumulating stock from the market clearly indicating that the stock is undervalued.

Previous Article: GAEL: Promoters buy 53,506 shares from market in August2010, Annual Report for year 2010
Next Article: GAEL: Sept Qtr Results on Oct 23,2010

8 comments:

Anonymous said...

Thanks Pralhadji on providing updates. Certainly it is time to hold GAEL till it reaches to it's potential targets. I am curious about the screen shot attached to the post. Could you pls provide the name of the site which provides all this information?

Guru

What'sUp Prahalad said...

Guru ji:

The site is hindustan bulls

Sorry for not providingthe link earlier..
http://hindustanbulls.com/StockPage.asp?CompanyTicker=GAEL.BO&MarketTicker=Bombay&Typ=S

=happy investing
whatsup-indianstockideas.blogspot.com

TSR.ARIJIT said...
This comment has been removed by a blog administrator.
mk said...

Dear Prahalad,

I have to thank you with gratitude on two counts.
One for recommending GAEL at the right moment and constantly updating the much needed financial status of the company to boost our confidence on the value.
Two for recommending Garlic for general health , which I have been using for the paste few months since your article. It has boosted the immune system and I am less prone to catching cold , throat infection etc. which was frequent before.

Thanks with gratitude.

Regards
Murali

What'sUp Prahalad said...

Murali:

This is great news specially the fact that "Garlic" has helped you to boost your immune response..

"Health is wealth" is true and to be able to help you at a fundamental level is nothing but the best compliment ever..

Raw Onion is also something that has a very high level of anti oxidants .. more than green tea and other exotic recommendations..

The thing is onion is not marketed because its a cheap commodity and cannot be profited from..

So Raw Garlic and Raw Onion are the best on a daily basis.
=============
Regarding Investments..

- The most important thing from an investment prespective is to prevent any losses first..

- Loss prevention can be done by buying at a discount to the fundamental valuation of the company..

- Profits can be made by not being swayed by the emotional barrage of information dished out at the public and to be able to look at the forest from the trees..

- The next important aspect of investment is the "Exit" point ..
We havent reached the exit point in GAEL and generally its when you see "euphoria" all around for the stock and for GAEL it will be certainly above 100+

I hope we all are able to benefit by investment ideas in this blog.

=happy investing
whatsup-indianstockideas.blogspot.com

mk said...

Dear Prahalad,
Thank you very much. Would like to be associated with you for a long run. Hope the design of destiny would work in my favour.
Regards
K.Murali

Anonymous said...

Hi

I'm planning to invest in FCS Software and Resurgere mines and minerals.Please advice me at which level i can enter into these stocks and wat will be the price target in 3 year perspective

What'sUp Prahalad said...

Anonymous:

FCS Software:
CMP: 2.70
Face Value: Rs 1/=
Market Cap: 277Cr
Reserves: 133.94Cr
Sales: 271Cr (consolidated)
Gross Profit: 32.84Cr
Taxes: 1.22CR
Promoter shareholding: 31.34% March 2010 (Last year 67.92%- March 2009)
ROCE: 8.09% (March 2009)

=================
Generally Software companies are not my cup of tea.. due to their high margin business..
=================
Add to that promoter holding has dropped more than 50% which increases supply of stocks..
Low tax payment makes earnings suspect..
Rs 1 Face Value when the stock at best would quote at 20 for Rs 10 face value shows that FCS is targetted at the Penny stock market..
I think FCS is a clear Avoid.
====================
Pls note These are my views and suggestions please do your own deep dive before making an investment decision.
=======================
Resurgere:
CMP: 2.20
Market Cap: 394.62Cr
Reserves: 357Cr
Share application money: 21.23Cr
Equity: 28.54Cr
Debt: 122Cr
Sales: 531Cr
Gross Profit: 59.52Cr
Net Profit: 27.44Cr
Taxes: 15.62Cr
==================
I like the large tax outgo which means the earnings are for real..but then..
ROCE: 9.95%
Operating Cash flows are negative for 5 years

- Again an avoid as Equity dilution is on cards due to 21.23Cr of share application money
- low promoter holding..(26.81%)
- Poor ROCE and Cash flows from operations are negative for past 5 years or more..

=happy investing
whatsup-indianstockideas.blogspot.com