Stock selection is not an easy task.
First of all, need to identify quality stocks which is itself a tedious task as you need to look at the financials of the company, the competitive strength, and weakness of the company, and the future growth prospects.
Secondly, you need to ensure that you do not invest in overvalued stocks.
Finally, you need to keep yourself updated with the latest news and economic situation to ensure that the companies you have invested in are on track. If not, you might need to consider selling them.
What if I tell you 8 stocks where you can invest for the long term without even thinking about the stock price? In fact, you can even invest in these stocks every month.
The underlying factor for the selection of these 8 gems from the list of 6000 listed companies on the Indian stock exchange is:
- Excellent track record in the past 10 years
- Highly experienced and competent management
- Strong product portfolio and brand name
- High competitive advantage over the competitors
- A very bright future prospect
Here is the list:
Sector: Luxury Retail
Founded in 1984, Titan is an Indian luxury goods company that mainly manufactures fashion accessories such as watches, jewelry, and eyewear. It is a part of the most trusted Tata Group. Some of the popular brands of Titan include Titan watches, Fastrack, sonata in watches. Tanishq in jewelry and Titan Eyeplus in eyewear category and Skinn in perfume category.
Look at the growth in the share price of Titan:
In the last 10 years, Titan’s share price has increased from Rs 180 in Dec 2010 to current levels of 1400 in Dec 2020. That’s a return of more than 7 times in 10 years!
If we talk about the future, the biggest theme for India in the next 20 years is Consumption!
Consumer spending in India is likely to grow from US$ 1.5 trillion at present to US$ 6 trillion by 2030, making it the third-largest consumer market in the world after US and China. There is a rise in salaries and people are spending money on luxury items like watches, jewelry and accessories like eyeglasses. Titan is the leader in Indian luxury segment which has immense growth potential as most of the categories are highly underpenetrated.
Sector: Information Technology
When it comes to Information Technology, India is the world leader with more than 50% of the market share of the 200 Billion $ IT Industry. Founded in 1968, TCS is the biggest IT company of India with a market cap of more than Rs 10 lakh Crore!
Look at the growth in the share price of TCS:
In the last 10 years, TCS share price has increased from Rs 550 in Dec 2010 to current levels of 2700 in Dec 2020. That’s 5 times return in 10 years!
If we talk about the future, the future is digital. And TCS would play a key role in building the digital infrastructure all over the world. Hence, the future of TCS is very bright!
#6 HDFC Life
Sector: Life Insurance
Life insurance sector in India is highly underpenetrated. But slowly people have started to realize the importance of term plan and medical plan to provide financial security to the family.
HDFC life is one of the biggest and fastest-growing private players in the life insurance space.
Look at the growth in the share price of HDFC life:
HDFC life has launched its IPO in Nov 2017, since then the share price has almost doubled from Rs 340 to Rs 650 by now.
Demographic factors such as growing middle class, young insurable population, and growing awareness of the need for protection and retirement planning will support the growth of Indian life insurance and HDFC life would be leading the growth.
#5 Asian Paints
Making a home is always a dream of middle-class people in India and everyone wants their new home to look beautiful. Asian Paints is one company that is making this dream come true in the most colorful way for more than 75 years now.
With a tagline of “Har ghar kuch kehta hai”, this company has been the undisputed leader in the Indian paint industry.
Look at the growth in the share price of Asian Paints:
In the last 10 years, Asian Paints share price has increased from Rs 270 in Dec 2010 to current levels of 2400 in Dec 2020. That’s ~9 times return in 10 years!
If we talk about the future, one of the key trends is “personalization”. Be it homes, offices or institutions, every space is unique and requires its own special treatment. Asian Paints is well-positioned to encash this opportunity with its innovative and wide range of product offerings as a complete home decor solution company.
Started in 1959 with Fevicol, Pidilite is the no 1 adhesive manufacturing company in India. Pidilite brands Fevicol, Fevikwik and Fevistick are so popular that people do not say that “give me an adhesive”. They say that “give me Fevicol or Fevistick or Feviquick”. This kind of branding is only possible when the products are top class and the market leader with strong dominance.
Look at the growth in the share price of Pidilite:
In the last 10 years, Pidilite share price has increased from Rs 150 in Dec 2010 to current levels of 1600 in Dec 2020. That’s more than 10 times return in 10 years!
Look at the future growth, with many people moving from small towns to cities, there is huge scope for growth in the construction segment which eventually is going to drive the growth in adhesive and sealant for use in furniture and waterproofing solutions. Pidilite is the biggest brand in this category with almost no major competitor.
#3 Hindustan Unilever
Hindustan Unilever is the biggest FMCG company in India with a market cap of more than 5 lakh crore!
Some of the popular brands of HUL include:
Surf excel, Rin, Wheel, Sunlight, Vim, Pureit, Lux, Lifebuoy, Dove, Fair & Lovely, Pond’s, Vaseline, Clinic Plus, Sunsilk, Indulekha, Lakmé, Pepsodent, Closeup, Axe, Brooke Bond, Lipton, BRU, Kwality Wall’s, Knorr and Kissan, Horlicks and Boost.
Look at the growth in the share price of HUL:
In the last 10 years, HUL share price has increased from Rs 300 in Dec 2010 to current levels of 2,200 in Dec 2020. That’s more than 7 times return in 10 years!
If we talk about the future, many people in small towns and villages are still using low quality unbranded products. There is huge scope for HUL to increase its presence in rural areas in India. In fact, in urban areas, consumers have more income in their hands and want better lives. It would result in more demand for branded products in personal care, food and home care space. With one the strongest distribution network, HUL is well positioned to meet this demand. HUL is also innovating to meet the changing demand of consumers. For example, HUL has launched multiple products in the health and hygiene category.
#2 HDFC Bank
Banking system is the backbone of any economy. Think this way – For you to take a new home or car, you need a loan from the bank. For any business to grow, it needs capital from the bank. So basically, everyone is dependent upon the bank for finances.
Established in 1994, HDFC Bank is India’s largest private sector bank with a market cap of 7.5 lakh Crore!
Look at the growth in the share price of HDFC Bank:
In the last 10 years, HDFC Bank share price has increased from Rs 220 in Dec 2010 to current levels of 1,300 in Dec 2020. That’s more than 6 times return in 10 years!
If we talk about the future, the banking system has a very bright future. Earlier it used to take a few days to transfer money. But today, it is possible within a few seconds with UPI payments. Technology would play a key role in the growth. For India to become the 3rd largest economy in the world, the banking system would play a crucial role and HDFC bank is well-positioned to grab the opportunity.
One sector that has seen tremendous growth in India is “Telecom”. Just like banking is the backbone of the economy, telecom is the backbone of the digital revolution in India. With the availability of low-cost data, internet penetration has increased multifold times. Today, even rural parts of the country have access to the internet. This has completely changed the digital landscape of the country. And it was mainly possible due to Reliance Jio.
Although Reliance Jio is a part of Reliance Industries which has a major revenue from the refining and petrochemical business, Reliance industries owner Mr. Mukesh Ambani clearly understands that “data is the new oil”. Hence, he is transforming reliance industries towards a digital major.
Started in Sep 2016, Jio is now the biggest telecom company in India with a subscriber base of 40 Crore. All that in just 4 years! This is just mind-blowing!
Look at the growth in the share price of Reliance:
In the last 10 years, Reliance’s share price has increased from Rs 500 in Dec 2010 to current levels of 2,000 in Dec 2020. The majority of growth has been in the past 4 years after the launch of Jio.
If we talk about the future, the digital revolution in India has just started and there is a long way to go. Reliance Jio is going to play a huge role. Reliance has also made a solid presence in retail and media business which has also got a great opportunity for growth. Hence, Reliance is one stock that you should have in your portfolio.
The above detailed analysis is done by Sahil Bhadviya, Personal Finance Coach & Consultant.
What do you think about this list? Do you own any of the stock in your portfolio? And, did I miss any stock? Do let me know in the comment.