24 October, 2008

The current bear run in the stock markets is a great investment opportunity for long term stock investors. Many bluchip shares are beaten down and valuations are great  for investing. Long term investors can start accumulating these stocks at the current valuations. Here is a look at six Bluechip stocks which offer a great investing chance.

ACC

In the last bear phase in the late 1990s, ACC lost nearly 50% of its market capitalisation from its peak.

In the current market turmoil, the stock is already down by over 60% from its peak.

So, with each fall, the downside is getting limited. Besides, the stock has never been available so cheap.

. At its current price-earnings (P/E) multiple of around 7.5, the stock is trading at less than half its 15-year average P/E. And the icing on the cake is a 4% dividend yield — another historic high.

Castrol India

The company is India’s largest manufacturer of lubricants. Lubricants are consumables and their demand is directly related to the number of vehicles on the road and the level of manufacturing in the economy.

In the past five years, the number of vehicles on Indian roads has nearly tripled, while manufacturing capacity across sectors is about to jump manifold. This will ensure that the company will see a steady growth in revenues and profits in the next few years.

The market seems to have recognised this and the stock has appreciated by 15% in the past 12 months. And despite this, its dividend yield is at a high 5%.

Kesoram Industries

The company is set to emerge as one of India’s leading tyre manufacturers.

Tyre demand is expected to grow in double digits, thanks to an explosion in the number of trucks and commercial vehicles on the road.

This will provide the company with earnings stability at a time when margins in cement are peaking out.

We expect a sharp improvement in the tyre division’s profit margin, thanks to a fall in the prices of natural rubber and crude oil.

LIC Housing Finance

The company has stepped up its marketing efforts in the past year, which has led to a 200- basis points increase in its market share to 7% by the end of FY08.

Housing demand is relatively inelastic to the economic downturn and we expect the company to see a 20-25 % year-on-year growth in loan offtake in the next few years.

Madras Cement

It is one of best-run cement companies in India with an unbroken record for generating profits and paying dividends for over three decades now.

It used the boom in the cement market in the past few years to expand aggressively and is likely to emerge as the largest player in South India.

The region is India’s fastest growing cement market. The stock is currently trading at over 50% discount to its lowest P/E in the last downturn in the late 1990s.

Petronet LNG

Petronet LNG is India’s only LNG importer, which is doubling the capacity of its terminal at Dahej to 10 million tonnes per annum (mpta) by December ’08.

Currently, the company has firm contracts for import of 5 mtpa of LNG, which will be scaled up to 7.5 mtpa next year.

Apart from this, the company has been sourcing spot LNG cargos to cater to the natural gas requirement in the domestic market.