Multibagger Stocks- A Bag Full Of Multifold Returns...

Initially used in the book “One Up On Wallstreet” by Peter Lynch, Multibagger stocks are the ones that had crossed your mind when you heard the term share market every time. We all ones in our life thought that investing in the share market will lead us to huge returns. But unfortunately, this turned out to be just an imagination. But standing at this point of time; whether you are a beginner or a regular investor in the stock market, let us introduce you to the term “Multibagger.”

Multibagger stocks are the ones that inspire the investors to invest by generating upteem higher returns for a Trader. Companies that have colossal growth potential might turn out to be a Multibagger Stocks that are highly demanded in the market. However, identifying the perfect Multibagger Shares that are capable of generating Multiplied profits is a concern among the investors. Therefore, we at Lakshmishree Investment And Securities Pvt. Ltd - A Premium Stock Broker, serving our clients unbiasedly for 30 years, are here with this live webinar on Identifying Multibagger Stocks by our Senior Research Analyst - Anshul Jain. He is a Swing/Trend Trader with 16+ years of experience who likes to share his trading ideas. His Analysis is based solely on Price Action, Pivots and Moving Averages. Besides, his expertise lies in the area of “Index and Select High Beta Stocks.”

Defending the tricks to pick up the ideal Multibagger stocks that shall come up with Multifold profits in the coming period of time. Join us on 12th of September, 2020 that is Saturday on “Sensible Investing - Pick Multibaggers” to kickstart your weekend by learning something new meticulously in the area that captivates your investment. We would be commencing the webinar by 11.00 AM. 

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Am I Allowed to Have Multiple Demat Accounts? – An Investor’s Guide

 Demat account is the necessity for anyone who is looking to invest in the Indian financial market. Similar to this, there is a trading account. Both accounts are very important if it is to invest and hold shares and other securities for the long-term period. With a trading account, one can buy or sell shares, whereas a Demat account holds the shares in electronic form. Therefore, it is important to have a Demat account if you are planning to deal in the financial securities.

In simple words, we can say that a Demat account is not much different from a bank savings account. A Demat account is used to hold securities such as Equity Shares, IPO Shares, Bonds, Mutual Funds, Exchange-Traded Funds (ETFs), Government Bonds and so on while a bank savings account is used to hold cash.

Now, there has been a lot of confusion having multiple Demat accounts for use. Many investors are confused over whether they can open second Demat account or not. With this article, we aim to address the question that is penetrating the minds of many investors.

Can a Person Have Multiple Demat Accounts in India?

The simple answer is, yes! You are allowed to have multiple Demat accounts in India. In fact, you can have as many Demat accounts as wish. However, there is a limit of only one Demat account with a broker or Depository Participant (DP). It means, if you have already opened a Demat account with some broker, you cannot open another account with the same broker. Some investors or traders give preference to multiple Demat accounts to capitalize on the facilities provided by different brokers or to separate their long-term investments from short-term trades.

Investors who trade in multiple securities such as equity shares, gold and F&Os use different Demat accounts to separate their investments. In short, keeping multiple Demat accounts help in segregating the investment and trading portfolio. However, using more than one account would cost you higher in the form of annual maintenance charge (AMC) which will be separate for different Demat accounts. And this amount will vary from broker to broker.

In addition, it would be recommendable to avoid using multiple accounts if you are a seasonal investor. Having an account unused for long-duration might lead to the possibility of being frozen. Although your shares will be safely held with the depository.

Therefore, legally, one is allowed to use multiple Demat accounts but one should also be prepared for certain complications like extra AMCs, separate DPs, and account being frozen during inactivity. If you are a seasonal investor or trader, you should avoid using multiple accounts, as it would lead to complications. However, if you are a professional who is looking to separate his/her investments and trades, and would like to benefit from different facilities by different brokers then you can use multiple accounts to do so. It all depends on your needs.

Should You Invest In Large-Cap Stocks, Mid-Cap Or Small-Cap Stocks?

 Before we share the answer, let's understand what large-cap, mid-cap and small-cap stocks are.

According to the Securities and Exchange Board of India's (SEBI) guidelines, the large-cap space includes top 100 companies by market cap; the mid-cap space includes companies ranked between 101-250 by market cap, whereas, the small-cap category consists of the rest.

Now coming back to the topic as to whether you should invest in large cap stocks or look at mid-cap or small-cap stocks.

Coronavirus pandemic spared nobody - not even small-cap, mid-cap or large-cap.

But during such times, we accept a universal idea of investing more in large-caps. And why not? The theory, after all, goes as large-caps are relatively more stable during such times, and can withstand significant market disruption. In such cases, small-caps and mid-caps may take a longer time as compared to large-caps to recover.

On the other hand, the performance of mid-caps and small-caps hinges on macroeconomic performance. When the economy is on an upward trend, the small and mid-cap stocks relatively move faster.

So, the evident approach is, position your portfolio towards large-cap before a crash and move it to small and mid-cap when the economy is just about to recover. Sound great, right? However, the trick lies in identifying phases of the market crash and recovery, which is easier said than done.

Anyways, let's look at how these indices fared against S&P BSE Sensex:

If you look at all the three indices, the fall looks quite coordinated in the range of 38-40%.

Now, let's talk about the recovery from 23rd March.

As on 6th Aug 2020, S&P BSE Smallcap is winning the race followed by largecap and midcap index. The recovery in large cap has been led by a select few stocks such as Reliance Industries.

Also, if you closely look, Sensex performance surpassed midcap index performance. In fact, midcap index is still about 12% lower below its all-time high as against 9% for Sensex and large cap index.

Since their March lows, large-caps, small-caps and mid-caps have staged a robust recovery, driving valuations up.

So, is there a buying opportunity in the mid-cap and small-cap space?

Investing in mid-cap and small-cap is risky, especially considering the current times of slowdown. For small-cap and mid-cap stocks to perform, a broad macroeconomic recovery would be required such as affordable credit growth, rise in demand, etc., which are subdued currently. If you look now, earnings growth remains muted except in select pockets like FMCG, Pharma, Telecom, Banks and IT stocks.

Here are a few things to consider while investing in small-cap and mid-cap stocks:

• There are many mid-cap and small-cap stocks available at attractive valuations. However, the decision to invest in small-cap and mid-cap stocks should be based on your risk appetite, investment horizon and macroeconomic recovery. Even large-cap exposure requires 5 years, small and mid-caps may require even longer time horizons.

• To reduce risk, one should invest in a well-diversified portfolio of large-cap stocks, mid-cap stocks and small-cap stocks.

• Considering the dynamism, one may allocate higher proportion to large-cap stocks currently, given they have seen many such down cycles and have come out of it unscathed. To mitigate risk, one may increase their weightage to mid-caps & small-caps weightage once the risk-on mode is back but below 50%.

• For investors who are in losses after investing in small and mid-caps should not commit the mistake of selling them and moving into large-caps. That may take a longer horizon. In this case, one should follow the bottom-up approach and stay invested in stocks that display healthy fundamentals.

There are many large-cap, mid-cap and small-cap stocks. The final choice should always be dependent on your risk, horizon and goals.

How Investing in Gold can help you with balancing Equity Risks?

 The stock market is something that you cannot simply predict and time the market. It is the place where the best thing you can do is stay invested for the long-term. It is how you can create wealth over time. We all remembered the beginning of the year 2020 when the market was trading at all-time highs. It came out of nowhere and spoiled everything. It has changed life, as we have known it. The coronavirus has put the global economy into a recession. In such times, the investors are hesitating to continue to make stock investments as they have already incurred significant losses.

The interest rates globally are being reduced to near zero to make money cheaper and encourage businesses to borrow, spend, and invest. With the widespread unemployment, steep cut in salary, wealth destruction, and risk of more rising cases would require more policy actions.

As of now, the Reserve Bank of India (RBI) repo rate stands at 4 percent, the lowest it has ever been. Meanwhile, the 10-year bond yield is currently yielding 5.83 percent, the lowest in the decade. It is not just in India but in parts of Europe and Japan as well. The fact that the interest rates are at a decade low and likely to remain so, the interest offering in term deposits and small saving instruments will result in an outflow of funds from debt instruments. Consequently, the investors who are looking to invest in bonds as a diversification strategy against equities must stay away from the debt market for a while now. Investing in bonds will lead to low annual payouts and limited appreciation going forward.

Therefore, the question is, if the bond investing is not ideal then how to diversify the portfolio to balance the equity risks.

How to balance Equity Risks then…?

Interestingly, the same macroeconomic factors of heightened risk, low-interest rates, and high inflation are increasing the portfolio relevance of another asset class – gold. Gold is an asset class, which has a negative to zero correlation with risk-averse equities. Gold is typically the ‘Safe Haven’ asset in times of uncertainty and existing pandemic situation. Over the years, it has continued to perform well and displayed its sheen. During pandemic times, it has become the most lucrative asset to invest in and balance the equity risks. However, the demand for gold jewelry has taken a hit but the demand for the investment forms of gold is rising.

Giving the uncertainties in the equities and debt instruments, gold investing has the potential to receive potential returns. Investing in gold is a smart way to hedge the portfolio against equity risks and holding it with a long-term horizon can lead to higher returns.

The fact that interest rates are at a decade low, it will result in outflows of fund from debt to equity by domestic investors. However, there are risks of pandemic situations that may stay longer than expected. Any delays in medical solutions, alongside tension between India and China, can affect financial markets further.

In such a situation, gold investing can be a way to help to balance equity risks on investment portfolios while making investments that can lead to higher gains in the future.

Why should you Invest in Wide-Moat Stock?

When we speak of the moat, Warren Buffet is one of the first names to click in the mind. The Oracle of Omaha was the one who used the term moat and coined it into the economic moat which means the ability to maintain a competitive advantage over its competitors. As of present, the word economic moat has become a marker for top companies

But what if we were to say that moat gets its definition from the medieval times? Yup, the word moat has had a different beginning and we’ll brief you on it down below.

What is a Moat?

If you have been one of the history buffs, then moat may be a word pretty known to you. Nevertheless, during medieval times, a large hole used to dig all around the castle and was filled with water. The wide and deeper the hole, the more protected is the castle. Moat is that safety arrangement or the hole that helps protect the castle against any intruders and attackers.

The same analogy was later on used by Warren Buffet about which we spoke up earlier in this article and was coined as an economic moat. Let’s have a look at it.

What are economic moat and wide-moat stock?

As is the case of the moat where the castle tends to have a competitive advantage over its attackers, similarly economic moat allows for a competitive advantage against its competitors. An economic moat is a metaphorical one and showcases the strong financial performance of the company. When a company tends to have an economic moat, the competitors will find it difficult to dethrone it.

Companies with wide economic moat tend to have a sustainable competitive advantage. Ideally, any investor wishes to invest in those stocks which have steady growth and ability to stand the market downtime to come up big. There are quite a few companies that enjoy this level of an economic moat. The shares of these companies which enjoy the economic and competitive advantage tend to be known as wide-moat stocks.

Why buy wide-moat stocks?

When it comes to stock investing, companies with wide economic moat tend to have a substantial advantage over others. A lot of smart investors opt for wide-moat stocks when it comes to investing as the wide moat stocks have plenty of benefits. Take a look at them.

1. Strong Brand Presence: Companies with economic moat tends to have a strong brand presence. Think of the FMCG sector, the aura that ITC and HUL (Hindustan Unilever Limited) have created around or say Nestle with their product lines. Many products on offer from these brands have such an economic moat that competitors can hardly match their level. These companies tend to stay afloat and stand steady for a long haul. Even after the debacle of Maggi in 2015, the company still bounced back and has been a strong player. The strong brand presence gives you leverage and will keep your investment value secure and rising.
2. High-Profit Margin: Companies with wide economic moat have cost advantages. To say, it’s not that there are no companies with similar product lineage or services in competition to the wide moat companies. There are plenty of them but the scale of functioning is pretty large for the companies with wide economic moat and that gives them a cost advantage. That translates to higher profit which means the company will be ideally a good one to invest in.
3. High Reliability: Although the market is everchanging and dynamic in nature, wide moat stocks enjoy a privilege that no other can. They have a competitive advantage to the last downturn in the market and even survive the harshest of situations. While many other companies may wind down, wide moat stocks will continue to be around. So if you invest in these, your investment will be reliable and be around for the long haul.
4. Better returns: When you look around in the market, the returns vary from one stock to another. Any company which is fundamentally strong will always have a steady hand in the stock market. Unbeknownst to either fluctuations or dips, the wide moat stocks tend to continue on their steady path. If you look at the return side of it, they tend to provide better returns in comparison to other companies. And the great thing about it, the returns continue along regardless of the market sentiments. As an investor going for a wide moat stock is a must as its benefits outweigh any other stocks in the market.

How to find wide-moat stocks?

Normally the wide moat stocks are easy to find out. As they tend to stand out easily. But merely going by the name won’t suffice as there are different parameters that you should look at. So if you’re looking to invest in wide-moat stocks, here’s how you can find them.

1. Brand Awareness: One thing that is similar for all wide-moat stocks is that those companies tend to have brand recognition in the market. Whether it’s a segment leader or a major player in the market, they tend to have that aura of awareness about them. To say, take the names of ITC, HUL, Infosys and more. All of these names are familiar ones. That’s one marker for you if you want to go for the wide moat stocks.
2. Earnings performance during different phases: When you are looking for wide-moat stocks, you have to examine the economic performance of the company during different phases. Look for the earnings and economic performance during the bullish and bearish economy. A company with economic moat will have a resilient performance during tough times and all.
3. Compare the financial performance against competitors:  Pit the financial performance of the company against its competitors. Look at the fundamentals of the company. Look for the revenues and expenses and identify the earnings. If there seems a big difference between the company and its competitors then it will be wide-moat stocks.
4. Company and their USP (Unique Selling Proposition): As we mentioned above, the companies who enjoy economic moat tend to have market domination and brand entity. These companies have brand awareness among people and are pretty known for it. To say, ITC, HUL, Nestle, all of them are the segment leaders in their product and service line. Their USP was in providing the people with products that went onto give them the popularity and now they hold that substantial advantage over their competitors.

Wide moat stocks are one to invest in. These stocks tend to be resilient in all times whether it’s the bullish or the bearish market. Having a wide moat stock in your portfolio is the perfect way to enhance your portfolio and set yourself for wealth appreciation in the long run. Look for the wide moat stocks and start your journey.

What Investors should look in the Company’s Quarterly Report?

It is believed that good investments are identified with strong efforts in the form of ratio and performance analysis. Particular attention is paid to the trend in ratios derived from the quarterly earnings report over time. One of the most anticipated numbers is earnings per share, net income, net sales etc. A quarterly earnings report is a quarterly filing made by a public company to report its performance. It includes all three financial statements, including the balance sheet, income statement, and the cash flow statement.

If you are a shareholder invested in shares of some XYZ Company then you must know what’s happening in the company and how its shares are performing in the market. The quarterly earnings report is one way to find out. Though it is not easy to understand all numbers like an expert would do quarterly earnings report are made in a way that a layman can go beyond and gauge the overall performance of the company in recent and next few quarters.

Key Things to Look in Company’s Quarterly Reports

It is an important insight for investors that investors should always remember to gauge the company’s performance to keep tabs on their investment performance. Here, we’ve enlisted some key things (or numbers) that you should look in the company’s quarterly reports.

Earnings per share (EPS)

EPS is one measure of much importance to investors as it indicates the profitability of the company which calculated by the company’s net income with its total number of outstanding shares. The very first thing an investor should do is to read the company’s quarterly revenue and adjusted EPS. After that, determine whether or not the sales and EPS meet, exceed, or miss the agreed estimates of analysts covering the company.

Gross Sales

Gross sales refer to the top line or revenue of the company. A consistent increase in gross sales shows the strength in business. While you’re at it, don’t forget to check the quantitative and qualitative improvement over time. Make sure, the growth numbers do not come from the selling of fixed assets. It can be identified in the balance sheet where the fixed asset will show a decreasing pattern.

Net Sales

Net sales can be derived from the gross sales by deducting sales return, sales allowances, and sales discount from gross sales.

Operating Expenses

The main goal of a company is to generate revenue. To fulfil that goal, the company pay expenses in the course of running the business refer to as operating expenses. It consists of items such as salaries paid to employees, legal & accountant fees, research & development fees, bank charges, electricity bills, and business license fees.

For investors, the operating expenses are exclusively important as they help in understanding a company’s cost and management efficiency. It helps investors in understanding the needs and costs that a company needs to generate revenue.

Net Profit or Net Income

In the income statement, an investor can find the details on loan and tax repayment which deducted from the operating profits will give you the net profit. It is also known by ‘bottom line’ which shows the company’s net earnings or losses in the respective quarter.

It is an important measure for an investor to look out for. It helps investors ensure whether the company is performing well or not, giving him the hint on the following performance of the shares he owned.

A Wealthy Mindset Is Very Important For Wealth Creation

It is said that wealth creates wealth. But there is something which is even more important. And that is a wealthy mindset.

But unfortunately, most people fail to pay attention to it.

According to a quote by Bill Gates, the founder of Microsoft and world's second-richest man “If you are born poor, it is not your mistake, but if you die poor, it is your mistake”.

This is so true. Most people dream about being wealthy but hardly do anything or set their mind to fulfil that goal.

Here are a few simple steps which anyone can follow to change their mindset and develop the right one for becoming wealthy:

Develop a wealthy mindset

Your mindset is a collection of your thoughts and beliefs that shape your thoughts and habits.  

A wealthy mindset means spending wisely, creating multiple source of income and choosing the right investments which can grow your wealth, and looking for ways to improve your overall financial position while avoiding unnecessary risks.

Do you know that Robert Kiyosaki, the author of Rich Dad Poor Dad book, once found himself completely penniless and in deep debt of over $1 million?

Even under those circumstances, he proclaimed he was a rich man. He knew he had the option to give up building wealth again. But he didn’t.

“I am a rich man — and rich men don’t do that!” he declared to his wife with baffling confidence.

Despite nothing in his bank account, his mindset of wealth remained stronger than ever. He has since gone on to create a huge fortune through his Rich Dad Poor Dad curriculum.

So, you see, building massive wealth only happens when you have a firm belief that you can do it.  Developing a wealthy mindset will help you stick to your financial goals and find ways to increase your earning potential.

Stop wasting your money and instead start investing

Today in our country, if you look around, you will see many people driving around in the latest BMW's, Audi's and Mercedes. While many of those people driving these cars would probably be ultra-rich, many are those who buy these cars simply to act rich with an intention to show off that they are wealthy.

This is a huge mistake which many non-wealthy people make in an attempt to imitate the lifestyle of ultra-rich people. In the process, they end up spending their money, which could have been invested for a better future.

So, instead of wasting your money on buying things just to act rich, spend your money wisely on things which make you happy and invest the rest with a long-term perspective.

Invest your money in the right instruments

Wealthy people don’t invest in fixed deposits, property, gold or bonds. Instead they invest in businesses because
they know that it is one of the best and the quickest ways to multiply their wealth.

But you actually don’t need to start a new business to create wealth. You can just buy a portion of an existing business which is doing well by investing in its equity.

Among the thousands of companies listed on Indian stock markets, how do you select the right business to invest in?

That is why we are here to make things easier for you. As an independent research advisory with an in-house research team, Lakshmishree can help you in wealth creation through long-term equity investing. Click here to get started now.

Be patient with your investments

It is no secret that building great wealth requires a lot of patience and time. Every rupee that you invest wisely has the ability to grow each year. 

Most self-made wealthy people around the world have multiplied their wealth by harnessing the power of compound interest, which Albert Einstein described as “The greatest power in the universe.”

Majority of people who become wealthy, over a long period of time, have also attributed the phenomenal growth in their wealth to the art of remaining patient.

Bottom line

Developing a wealthy mindset is the key to becoming wealthy. Studies in neuroscience have proved that human brains continue to develop and change even as adults. So, it’s never too late to start developing a new mindset.

Cultivating a wealthy mindset could be the single most important thing you can ever do for achieving your goal of becoming wealthy.