My Sunday work – Looking for the best stocks to buy in India for long term

“You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position” – Benjamin Graham

 

Today is Sunday. In the morning I was reading Economic Times. Suddenly I saw a notification in my mobile. It says “best stocks to buy in India for long term”, an article from a popular blog. I opened the article. It had a few names like Bajaj Finance, Affle, Bharat Rasayan, and Coal India. Although I have heard about Bajaj Finance, Bharat Rasayan and Coal India, but the name Affle was completely new to me. So, I started looking for details.
Websearch for the best stock to buy in India
First, I started with moneycontrol.com. This is almost always my first destination. This website gives a lot of information in nutshell. However, I could not find out what this company is about. This is one problem with this website. It does not start with the basics of a company. So I had to come to Bloomberg. There I got to know that, Affle (India) Limited operates as a technology company. The Company offers consumer intelligence platform that delivers consumer engagements, acquisitions, and transactions through mobile advertising, as well as platform aims to enhance returns on marketing investment through contextual mobile ads and also by reducing digital ad fraud. Affle (India) serves customers worldwide.
Brokerages are all giving a buy recommendation. MC Insights says “Very Bullish”. In 1 year, the stock has given a return of 158.85%. Revenue and net profit have grown steadily in the last 3 years. I was almost thinking that I have hit a jackpot when the PE number hit me. PE ratio is 352.35, and the price is at 61.26 times it’s book value.

With a ROE of 20%- and 5-years PE ranging between 110 to 275 is this the right time for me to buy this stock?

Chart speaks

Let me move on to the charts. What appears to me is that this a good stock, but considering that this is quite expensive now, I will wait for the right moment.

 

This is the daily chart. It shows the short-term movement of the stock. The ADX is at 19.56 which indicates that this stock is in a trading zone. The Stochastics is showing a negative divergence. Also, if you look at the price it is moving in a range.

 

This is the weekly chart. ADX is strong here. Stochastics is naturally at an overbought zone. The price is moving up steadily week over week.

 

This the monthly chart. Although ADX and Stochastics are not clearly visible here, but Affle share price is moving up.

 

Overall, I can conclude that although the stock is consolidating now and probably will do the same in the coming days, but from a year or more perspective the Affle share price will move up. I am an investor with a minimum tenure of 1 year. Some of you might call this long-term trading. But I prefer to make money this way as I cannot afford to do trading daily, due to lack of time.

One important thing that I look for is the brand name. If the company is a big brand then downside risk remains low. Even if the stock goes down, it quickly bounces back. In this case I am not sure how renowned this company is, as I have never heard of it.

Therefore, I have decided to keep the stock in my Watchlist 1. I am not sure whether I will buy later or not. I will do more research on this. As of now keeping it in my watchlist is fine.

Highlights:

1. In my fundamental research as of now I have considered Bloomberg, Financial Express and Moneycontrol.com.

2. I have checked PE, Price to book value, Revenue, Net profit, ROE, and ROCE.

3. I wanted to see the PEG ratio but could not find it anywhere.

4. This stock is being held by 4 Indian mutual funds including, Reliance and Franklin Templeton.

5. Daily, weekly and monthly charts have been used for technical research.

If you have any inputs of doing a better research please mention that on our Facebook page.