Corona Virus Scare in Markets?, Opportunities are often born in a fog of Uncertainty.

Corona Virus Scare in Markets?, Opportunities are often born in a fog of Uncertainty.

Dear Followers,
The news of the coronavirus spreading outside China’s Hubei province has turned out to be that catalyst. Stocks have sold off. The coronavirus is deadly and the headlines from China about frontline medical workers becoming victims are heartbreaking. Nevertheless, the job of a prudent investor is not to speculate about short-term events.
The global economy has always recovered from calamities such as the tech bubble, the Recession, various pandemics, and so on. Let’s have a check on how BSE Sensex Fared 6 Months after various pandemics in the past. Below are % Gains/ Losses on the BSE Sensex after Various pandemics that hit.

    Looking at the current situation, stocks that have sound fundamentals having below attributes perform better than the index itself. This scare of the coronavirus is giving a good time to build a long term investment basket.

Attributes for a good long term stock:-

  1. Low debt or debt-free companies.
  2. Sound business models.
  3. High promoter holding.
  4. Very low or no pledged shares
  5. Very old businesses at least 15 years old.
  6. Easy to understand businesses.
  7. Good management pedigree and trustworthy promotors
  8. Growing sales, growing profits
  9. Stocks near or below intrinsic values
  10. Those stock which is cyclical will benefit from business upcycle and commodity upcycle.
  11. Promotor increasing stakes.
  12. High ROE, high ROCE
  13. Companies benefitting from operating leverage in the future due to underutilized capacity currently.
  14. Low PEG ratio
  15. High-interest coverage.
  16.  High competitive advantage due to long-standing relationships with their customers, logistical advantages, lowest cost manufacturer.
  17. Bargaining power with their suppliers
  18. Low on receivable days.
  19. High entry barriers due to location advantage, huge capital investments to replace their capacities as a competitor.
  20. Depressed earnings now in cyclical stocks but as debt-free companies, these will be least affected compared to competitors but bound to do best in the industry as the tide turns. Those not debt-free, but has a big debt should provide confidence about the repayment.
  21. Old school, old economy stocks with no replacements for their products seen in near-decade.
  22. Promotors experience in the same business of more than a decade.
  23. Proven track record. Current Scare is giving an opportunity to buy, it’s time to be greedy when other’s are fearful. I believe 6 months from now, everyone will forget what coronavirus was?

 

TIME TO BUILD VISION VISION 2025 STOCK BASKET

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