Stocks in Uptrend: A Rising Tide of Opportunity

In the vast expanse of the stock market, where fortunes can be made or lost, the concept of stocks in uptrend stands out as a beacon of hope and potential. Imagine a scenario where stock prices steadily climb, propelled by market forces, investor sentiment, and positive fundamental factors. This sustained upward movement, often characterized by higher highs and higher lows, creates a wave of optimism and enthusiasm among market participants.

Stocks in uptrend represent a rising tide of opportunity for astute investors. They signify a market environment where the prevailing sentiment is positive, and the overall trajectory is upward. This trend is fueled by various factors, such as strong corporate earnings, favorable economic conditions, innovative product offerings, expanding market share, and positive industry trends.

In this blog, we will explore the concept of stocks in uptrend in greater depth. We will delve into the factors that drive this trend, examine different strategies to identify and capitalize on stocks in uptrend, and provide insights on risk management techniques. By understanding the dynamics of this captivating phenomenon, you will be equipped with valuable knowledge and tools to navigate the tumultuous waters of the stock market, harnessing the rising tide of opportunity for your investment success. So, get ready to embark on an exciting journey as we navigate the waters of stocks in uptrend and uncover the potential rewards that await astute investors.

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As Nifty is near an all-time high, the risky behaviour is going ahead as investors become increasingly willing to accept lower returns for taking higher risks.

“The aforementioned behaviour is typical of a bull market environment and is currently starting to manifest itself in terms of diminishing earnings yield spread of small and midcaps over large caps,”

ICICI Securities warns that investors are increasingly willing to take higher risks for lower returns as the Nifty approaches record highs. The shift from abnormally low interest rates to normal levels may limit equity returns from risky assets. The brokerage firm predicts a modest 8% upside from the current levels

Brokerage house ICICI Securities said- Source: The Economic Times

stocks in uptrend- Top 17 stock picks from ICICI Securities

ICICI Securities’ top picks from their coverage universe encompass a diverse range of stocks. These recommendations include SBI, Bharti Airtel, BHEL, NTPC, BPCL, M&M, Phoenix Mills, Brigade, Interglobe Aviation, Kalyan Jewellers, Jubilant Foodworks, Zomato, SBI Life, IGL, JK Cement, Century Plyboards, and Greenpanel. These stocks have been identified by ICICI Securities based on their analysis and potential for investment opportunities. It’s important for investors to conduct their own research and consider their individual investment goals before making any decisions.-

Let’s learn about the essentials and fundamentals of some of the stocks.

State Bank of India

SBI boast a robust ROCE of 5.21% and an impressive ROE of 16.8%, SBI demonstrates commendable profitability. The company’s trailing 12-month operating revenue stands at Rs. 473,378.14 Cr., showcasing a remarkable annual growth rate of 16%. With an EPS TTM of 62.35 Rs per share, the stock has witnessed a remarkable YoY rise of +53.89%. Its alluring low PE of 9.37 adds to its attractiveness, as the combination of a high EPS accompanied by a low PE is often regarded as a coveted golden combination in the world of the stock market.

The company showcased its financial prowess with an impressive 76.1% CAGR profit growth over the last 5 years, while also maintaining a healthy dividend payout of 17.3%. In the past year, the company achieved a remarkable 16.3% increase in annual revenue, reaching Rs 473,378.1 Crores. Moreover, the annual net profit experienced a substantial 57.3% rise to Rs 55,648.2 Crores. However, despite a 21.9% increase in stock price, it underperformed its sector by 11.5% during the same period.

Key drawbacks: Debt to Equity Ratio of 1.6 is higher than 1. This implies that company assets are financed through debt. Furthermore, the average ROA over a 3-year period is only 0.70%, suggesting relatively lower profitability in relation to its asset base. Additionally, the company struggles with a high cost to income ratio of 53.87%, indicating higher operating expenses relative to its income.

Bharti Airtel Ltd

Bharti Airtel exhibits strong profitability with an impressive ROCE of 13.5% and ROE of 12.0%. The company’s trailing 12-month operating revenue stands at Rs. 139,144.80 Cr., showcasing its substantial business operations. The EPS TTM stands at 14.69 Rs. per share, representing a remarkable YoY increase of +93.00%. Although the Price to Earning Ratio (PE) is 60.3, higher than the sector PE ratio of 54.6, it is essential to consider the relationship between PE and EPS. As the EPS of Bharti Airtel remains positive and demonstrates growth, it is likely that the PE ratio will be subdued in the future due to the impact of EPS. This suggests a potential for the PE ratio to align with the rising EPS, enhancing the attractiveness of the stock from a valuation perspective.

The company consistently maintains a healthy dividend payout of 22.2% and a Dividend Yield of 0.34%. It experienced a notable 19.6% rise in annual revenue, reaching Rs 140,081.4 Crores in the last year. Additionally, the annual net profit saw a remarkable 96.1% increase, amounting to Rs 8,345.9 Crores. Moreover, the stock price exhibited a strong growth of 38.2%, surpassing its sector performance by 5.9% in the past year.

Key drawbacks: The company faces key drawbacks, including Debt to Equity Ratio of 2.1 is higher than 1. This implies that company assets are financed through debt. A decrease in promoter holding by -3.98% over the last 3 years. Additionally, it has shown a concerning profit growth rate of -60.71% over the same period. Moreover, the company has significant contingent liabilities amounting to 51,889.50 Cr., which could impact its financial stability and performance.

Mahindra & Mahindra Ltd

The company maintains a healthy ROCE of 13.6% and an impressive ROE of 18.1%, indicating strong financial performance. With an operating revenue of Rs. 121,268.55 Cr. on a trailing 12-month basis, the company demonstrates substantial business operations. Furthermore, the annual revenue growth of 34% is exceptional, showcasing robust growth. The EPS TTM stands at 82.68 Rs. per share, registering a YoY increase of +39.80%. Moreover, the Price to Earning Ratio (PE) is 18.7, lower than the sector PE ratio of 45.7. This combination of high EPS and low PE is a healthy indicator, suggesting favorable valuation and growth potential for the stock.

Mahindra & Mahindra is committed to sharing its profits with shareholders, evident from its dividend payout of 30.2%, which amounts to 16.25 Rs per share. However, the dividend yield stands at a relatively low 1.05%. In the last year, the company experienced an impressive 34.4% rise in annual revenue, reaching Rs 122,475 Crores. Furthermore, the annual net profit showed a substantial 56.3% increase, totaling Rs 10,281.5 Crores. Despite a 35.4% increase in stock price, it underperformed its sector by 1.5% during the same period.

Key drawbacks: The company faces key drawbacks, including a debt to equity ratio of 1.6, which exceeds the ideal threshold of 1. This indicates that a significant portion of the company’s assets is financed through debt. Additionally, the low promoter holding of 19.4% raises concerns about the level of control and commitment from the promoters. The pledging of shares is minimal at 0.06%. Furthermore, the company experiences negative cash flow from operations, amounting to -7,074.02.

Indraprastha Gas Ltd

Indraprastha Gas is a leading player in the City Gas Distribution sector, known for its robust profitability. The company demonstrates strong financial performance, with a ROCE of 27.3% and ROE of 20.6%, indicating its profitability. With an operating revenue of Rs. 14,145.85 Cr. on a trailing 12-month basis, Indraprastha Gas exhibits substantial business operations. The annual revenue growth of 82% is outstanding, showcasing remarkable growth. Additionally, the current TTM PE ratio of 20.82 is lower than its sector PE ratio of 43.7, suggesting favorable valuation. The stock maintains a positive and growing EPS of 23.42, registering a YoY increase of +9.13%.

Indraprastha Gas stands out as a debt-free company, reflected by its zero debt to equity ratio. The company exhibits a healthy dividend payout of 39.1%, with a current year dividend of Rs 5.50 per share, resulting in a dividend yield of 2.66%. In the last year, the company experienced a remarkable 81.9% increase in annual revenue, reaching Rs 14,348.8 Crores. Moreover, the annual net profit showed a steady 9.1% rise, totaling Rs 1,639.7 Crores. The stock price surged by 33.2% and outperformed its sector by an impressive 32% during the past year. Additionally, the promoter shareholding remained consistent at 45% in the most recent quarter.

Key drawbacks: The company faces key drawbacks, including a poor revenue growth rate of 10.18% over the past 3 years. Moreover, there has been a decline in quarterly net profit, accompanied by falling profit margins on a YoY basis.

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Century Plyboards (India) Ltd.

The company is the Largest player of Plywood in India and supplier, boasting a significant 25% market share in the organized plywood segment. Stocks in uptrend as it maintains a strong financial position with a ROCE of 26.2% and ROE of 22.1%. With an operating revenue of Rs. 3,646.57 Cr. on a trailing 12-month basis, Century Plyboards demonstrates substantial business operations. The outstanding annual revenue growth of 21% further attests to its success. The company’s EPS stands at 17.25 Rs. per share, exhibiting a YoY increase of +22.62%, reflecting consistent growth. However, with a Price to Earning Ratio (PE) of 38.2, higher than its sector PE ratio of 32.1, the stock appears comparatively overvalued.

It has showcased commendable profit growth of 18.6% CAGR over the last 5 years, indicating its consistent performance. The company maintains a healthy debt to equity ratio of 0.2, implying that the majority of its assets are financed through equity rather than debt. This financial structure enhances the company’s stability. With a current year dividend of Rs 1.50 and a yield of 0.15%, Century Plyboards(I) demonstrates its commitment to rewarding shareholders. In the last year, the company experienced a notable 21.1% increase in annual revenue, amounting to Rs 3,694.3 Crores. Moreover, the annual net profit rose by 22.4% to Rs 383.3 Crores. The stock price surged by 25.1%, outperforming its sector by 8.3% during the past year, indicating market outperformance. Furthermore, the company boasts a high promoter holding of 73.04%, illustrating strong ownership and alignment of interests.

Key drawbacks:

The company faces key drawbacks, including a poor revenue growth rate of 9.85% over the past 3 years, suggesting challenges in generating substantial top-line growth. Additionally, the stock is trading at a relatively high PE ratio of 39.96, which may indicate a higher valuation compared to its earnings. Furthermore, the stock is trading at 7.66 times its book value, implying a premium to its intrinsic value.

stocks in uptrend: Bottom line

Stocks in uptrend present a promising opportunity for investors to ride the wave of upward momentum in the market. By identifying and strategically investing in stocks exhibiting sustained upward movement, investors can potentially capitalize on the growth potential and enjoy significant returns. However, it is important to conduct thorough research, consider fundamental factors, and manage risks effectively. With a keen eye on market trends and a disciplined approach, investors can harness the power of stocks in uptrend to navigate the market with confidence and unlock a world of potential opportunities.

Disclaimer

The blog is meant for informational purposes and serves the general analysis of the stocks. Contents provided here are based on careful research and analysis utilizing the fundamental and technical indicators over a period of time. The post does not consist any direct recommendation about Investing or trading in the securities market. Thorough research and careful consideration are necessary for individuals to fulfill their personal responsibility in making financial decisions. Seeking professional advice before making any financial decisions is always advisable.