Monday, August 19, 2013

Some Blue Chip Stocks Approaching Buy Zones - Part 2

As discussed last time as well, here are some updates to the value buying list for longer term investments

1] Larsen [LT]

Accumulation Band: 500-750 [Earlier band of 700-900]

Fundamentally sound company with good dividend yields. Over a 3 year horizon, it is expected to trade around 1250+ levels which is the profit-booking zone. One may start using current dips to buy for longer term investments.

Yes the counter has some NPA issues as with all PSU banks. The warning that the counter is set to test 1600-1800 bands was given even when it was trading at 2750 levels. In the short-term, it may slip to 1400 also. However, bottom-fishing is difficult. Accumulation band is 1400-1800 levels. Should there be some short-term blips below 1400 also one need not be worried. The dividends and longer term target of 2750-3000 is intact for SBI. One can buy into these dips for a 2-3 year horizon.

These are 2 heavy weight index stocks that bounce back much faster than the index itself when the longer term uptrend returns.

Please note that the current price levels in SBI and LT are almost near 2010/2011 lows when Nifty was at 4500-4800 levels. The consumption theme and IT theme will soon lose flavor when the Rollar returns to normalcy and stretched valuations make themselves unfurl. One can comfortably deploy around 20% of one's investment amount in these 2 stocks in 3 to 4 tranches over the next 2 months.

This is indeed a value buying / discount buying opportunity that does not present itself often IMHO. Happy investing.

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