Here’s a selection of buy-and-forget ‘coffee-can’ investing strategy stocks
The Indian stock market has been facing the winter blues given the swifter-than-expected tapering of an easy money policy pumped up by asset purchases by the US Federal Reserve and rising uncertainty about the new strain of coronavirus and its impact on global businesses.
Benchmark indices declined another 2% on Monday and have now corrected by a tenth from their peaks attained in October.
This adds to volatility in the market. While short-term traders would look to tweak their strategies to make money, long-term investors would look to again refresh their portfolio and see which stocks could provide them alpha over a longer period.
One such investment strategy is built around the ‘coffee can’ investing principle created by Robert Kirby around four decades ago. The principle seeks to help those looking at a set of buy and forget style of investments.
Popularised in India by former Ambit Capital executive Saurabh Mukherjea, who co-authored a book along with Rakshit Rajan and Pranab Uniyal, the strategy looks at firms with annual sales growth of over 10%, and yearly return on equity and return on capital employed over a long period above 15%.
We picked a set of such companies after factoring out stocks with a market capitalisation of less than Rs 1,000 crore.
The strategy throws up a list of 152 names with a demonstrated long-term efficient operating history. Within this, if we look at large-cap names, we get around 56 names. This is a little over one-third of the overall candidates.
The biggest names that figure in this list include those from top-tier IT stocks, FMCG companies, an odd drugmaker and a metals company.
These are TCS, Infosys, Hindustan Unilever, Wipro, Asian Paints, ITC, Nestle India, Hindustan Zinc, Pidilite Industries and Divi's Lab.
As we move to a lower stack by market value, we get names like Dabur India, Godrej Consumer, Bajaj Auto, BPCL, Havells India, Berger Paints, Mindtree, ICICI Lombard, Indus Towers, Marico and Mphasis.
Lower down the order are stocks like Bharat Electronics, P&G Hygiene, Jubilant Foodworks, PI Industries, Page Industries, Astral, Balkrishna Industries, Alkem Lab, Colgate-Palmolive, Abbott India, Tata Elxsi and Persistent Systems.
- Other companies in this list are Aarti Industries, Max Financial, Coforge, Relaxo Footwear, Glaxosmithkline Pharma, TVS Motor, Dr Lal Pathlabs, Supreme Industries, Hatsun Agro, APL Apollo Tubes, Atul, Escorts, Emami, Syngene International, Endurance Technologies, Pfizer, Indian Energy Exchange, Solar Industries, Bayer Crop Science, Coromandel International, CRISIL, KPR Mill and Grindwell Norton.
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