Investing In Value And Multibagger Stocks

Worth spending some time in reading this.
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Investors employ a multiplicity of techniques in choosing shares. What is
common amongst the various methods is that they don't always work. The
suggestions made in this discussion combined with common sense and good
judgment should help to hone your stock selection skills.

The first step in the selection process is asking yourself a few questions
to help clarify exactly what you want and expect from your investment. *It
is immensely necessary to endeavour to find out the amount of risk you are
prepared to take. Look back, and recall how you felt when you incurred some
financial losses*. Such memories, with some amount of honesty should help
you to find out your level of risk tolerance.

Companies on the stock market are grouped on two main basis: in terms of
similarity in size, and on grounds of carrying out the same activities
(sector grouping). If your analysis shows you are risk-loving, then your
focus should be on smaller companies or growth companies which are generally
riskier, with potential for higher returns. If you happen to be the risk
averse type or you want a share with minimum maintenance, then you want to
consider large organisations, which have a lower tendency to go bust and can
also serve as more reliable source of income. Such firms are known as 'blue
chips'. Target shares in industries or sectors that will be positively
impacted on my political ventures and economic trends.

After considering the category of companies you want to deal with, you
should begin inspecting the dividend yields and P/E ratios of the companies.
It is a good idea to be on the look out for companies with reasonably high
dividend yields. A P/E ratio between 7 and 10 is very much recommended.
Remember that a P/E ratio is only useful when compared to others. Consider
companies with P/E ratios that are lower than those of competitors in the
same industry, and also lower than the previous years' figures. The yearly
sales and earning per share figures should ideally be increasing over the
previous years. It's a good idea to consider growth companies that have
fallen on hard times, but shows signs of future recovery.

*You should also decide how long you will be holding the share for*. You
will thus be on the alert, when it is time to get rid of the share. *Higher
returns will be earned when a share is held for a minimum of 5 years*, with
substantial savings in dealing expenses. This, nonetheless, does not mean
that duds should not be turfed out before their planned disposal
dates. *Accordingly,
a winner should* *not be gotten rid of just because it has had a decent run*.
Tact should be exercised before selling shares and it is good technique to
keep an eye on the next share to grab, once the old one is gone.

*Do not catch a falling knife*. Although it is good practice to buy cheap
shares, some shares suffer a free fall in price, and stay cheaper and
cheaper with the passage of time. These should be avoided. Also eschew
shares recommended by newspapers and tipsheets. The explanation for this is
that market makers also read newspapers, and by the time you lay hands on
the share, every advantage it has would have been already siphoned out by
professional investors, especially, if you're considering a blue chip. If
you want to try your luck in securing a winner you may have to rummage
financial statements of companies that have capitalisation less that Rs 100
crs. Such companies do not attract professionals, hopeful you can beat the
market here.

It is almost impossible to outperform the market extensively. What you want
to avoid is losses. *A long-term goal of tracking the market,* *or better
still performing slightly better than it is quite realistic and dignified*.
You should decide to what extent you want to get involved with the
management of the share. Be prepared to buy investment management, when
necessa

If past history was all there was to the game, the richest people would be librarians. 

   In the business world, the rearview mirror is always clearer than the windshield. 

   It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently. 

   It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction. 

   It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
   Let blockheads read what blockheads wrote. 

   Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it. 

   Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars. 

   Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years. 

   When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact. 

   Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful". 

   Wide diversification is only required when investors do not understand what they are doing. 

   You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing. 

   You only have to do a very few things right in your life so long as you don't do too many things wrong. 

   Your premium brand had better be delivering something special, or it's not going to get the business. 

   Only when the tide goes out do you discover who's been swimming naked. 

   Our favorite holding period is forever. 

   Our favourite holding period is forever. 

   Price is what you pay. Value is what you get. 

   Risk comes from not knowing what you're doing. 

    Risk is a part of God's game, alike for men and nations. 

   Rule No.1: Never lose money. Rule No.2: Never forget rule No.1
   Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks. 

   The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective. The first rule is not to lose. The second rule is not to forget the first rule. 

   The investor of today does not profit from yesterday's growth. 

   The only time to buy these is on a day with no "y" in it. 

   The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves-and the better the teacher, the better the student body. 

   Time is the friend of the wonderful company, the enemy of the mediocre. 

   Value is what you get. 

   We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.' 

   We enjoy the process far more than the proceeds. 

   We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. 

   When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact. 

   A public-opinion poll is no substitute for thought. 

   Chains of habit are too light to be felt until they are too heavy to be broken. 

   I always knew I was going to be rich. I don't think I ever doubted it for a minute. 

   I am quite serious when I say that I do not believe there are, on the whole earth besides, so many intensified bores as in these United States. No man can form an adequate idea of the real meaning of the word, without coming here. 

    I buy expensive suits. They just look cheap on me. 

   I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over. 

   I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years. 

   If a business does well, the stock eventually follows.

...and here comes my favorite!

   There seems to be some perverse human characteristic that likes to make easy things difficult.

a)       Strategic Electronic - systems and solutions for Defence and
Paramilitary organizations for security and surveillance such as Intrusion
Detection, Integrated Security Systems, Global Positioning Systems,
Automatic Weather Monitoring Systems, Scanners etc.

b)       Energy Network Management Systems - Energy Management, Distribution
Management, Automatic Data Logging Systems and SCADA Systems for
applications in Power, Oil & Gas Industry, Railways etc.

c)       Traction Electronics - Power Electronic equipments for the Indian
Railways for their freight and Passenger Electric and Diesel Locomotives.

d)       Drives System - Integrated AC & DC Drive Systems for Metal, Mining,
Power, Paper and Process Industries for energy optimization, control and
automation.

e)       Building Management Systems - Integrated Building Management
Systems, including HVAC Controls, Fire Alarm, Access Controls and CCTV for
comfort, Energy Saving and Security of buildings.

f)         Tatanet Network Systems - providing solutions for Management of
Network connectivity services and internet services over VSATs for
Corporates, Banking and Financial Institutions and SMEs for them to run ERP
and other online office automation applications.

·         In a recent development, the company has appointed Mr. P. R.
Menon, (present Managing Director of Tata Power) as Chairman of the company,
who joined company's board on 20-07-2007. Mr. M. N. Bhagwat, resigned as
Chairman and also as Director of the company, as he was unable to transform
the company.**

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·         Mr. Ratan Tata is Chairman Emeritus of the company. Inspite of
such a small company of the group, Ratan Tata is still attached to the
company, as he had started his career with NELCO.**

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·         The works and facilities of the company is located at Mahape, Navi
Mumbai on 75,000 sq. ft. area. The sales offices of the company are located
at Mumbai, Bangalore, Chennai, Delhi, Jamshedpur, Kolkata and Secunderabad.*
*

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·         The company has recently changed its accounting year to end in
March, to coincide with its holding company Tata Power. This indicates,
alignment and restructuring of business with Holding company.**

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·         Tata Power had three other businesses. Power System Division was
transferred to Tata Projects Ltd. while Broadband Communication Business was
transferred to VSNL. Strategic Electronic Division having order booking in
excess of Rs.200 crores with status of a Prime Contractor with Ministry of
Defence (MoD) have received Pinaka Multi-Barrel Rocket Launcher contract,
remains with Tata Power. The division fits perfectly with the business
activities of NELCO, as NELCO is also on approved list of MoD. Insiders, say
that Tata Power is deliberating to transfer this division to NELCO.**

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·         If this restructuring takes place, NELCO's, financial performance
would vastly improve. NELCO had total income of Rs.61.95 crores for six
months ended 31-03-07 with PAT of Rs.1.40 crore. Accumulated losses were at
Rs.2.79 crores as at 31-03-07. This is the only company in the Tata group
that has not bounced back with  flying colours, which could happen with
transfer of SED of Tata Power.**

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·         The company has been receiving orders from MoD for Unattended
Ground Sensor laid on border as also supply of Power Converters from
Railway. The company also received orders for supply of MV Drives from a
leading Indian engineering company, among stiff competition with
Multinationals. With realty sector, growing faster than the industrial
sector, demand for Building Management System is growing rapidly. Hence, all
the divisions of the company have an excellent and bright future ahead,
which has a growth visibility of 30% to 40%, over the next 3 - 5 years.**

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·         Share is presently ruling at Rs.112 and with a feel of present
developments, major restructuring of the company is on the cards, which can
take the share price to cross Rs.200 mark, in the next 12 months.**