Tuesday, October 11, 2005

Companies I'd Love to Own - 1

For a follower of Warren Buffet, I’ve been quite remiss in my attention to great companies. It’s time I focused more on the brand names and businesses I’d be proud to own rather than chasing every company that looks undervalued and diffusing the gains on my portfolio.

Buying only on value and / or clear future promise is a philosophy that has paid off very well so far, getting me into great businesses like ITC, Infosys, SBI and Bharti at prices that seem throwaway by today’s standards. I’ve made at least 60% on these on an annualized basis, not bad by any standards!

In line with this strategy, I plan to maintain a watch-list of my favourite companies, starting today. Today’s post contains a few of the more obvious ones and I will keep adding companies to the list over subsequent posts. These may not be undervalued right now – in fact almost all would be priced quite high in today’s market – but there’s bound to be a time in future when I can pick them up on ‘sale’.

And, when that happens, I’ll be there. Will you?

Today’s List

I bet you recognize all of these companies, making them a great way to start a list of 'Great Companies to Own'

  1. Jet Airways
  2. Blue Star
  3. Hero Honda
  4. Bajaj Auto
  5. Maruti Udyog
  6. State Bank of India
  7. Punjab National Bank
  8. ICICI Bank
  9. HDFC Bank
  10. Kotak Mahindra Bank
  11. United Breweries
  12. ITC
  13. Infosys
  14. TCS
  15. Wipro
  16. Blue Dart
  17. Sintex
  18. Britannia
  19. HLL
  20. Asahi India
  21. Apollo Hospitals
  22. Hotel Leela Ventures
  23. Mirza Tanners
  24. CRISIL
  25. Trent
  26. Pantaloon Retail
  27. Dabur
  28. Marico
  29. Gillette India
  30. Cipla
  31. Wockhardt
  32. Ranbaxy
  33. Bharti Televentures
  34. Biocon

Do write in with your suggestions on companies big and small that might belong to this list. They must have something that gives them a strong, sustainable advantage in their market. Usually this is a brand name but it could be anything - a captive market, a niche area of expertise that others cannot get into, an early mover advantage in a potentially lucrative market...

Will wait for your comments. See you next time.

11 comments:

Anish said...

You have not considered cement. Guj Ambuja Cement has been another consistent performer With the current thrust on infrastructure..a sure shot winner..
brandfocus.blogspot.com

Sumit said...

What about PSUs? ONGC etc. I would have liked ndtv and Bloomsbury Publishing before Harry Potter started breaking sales records (though i know its not listed in India). There were more I'd thought of but now they vanishing.

Anonymous said...

Are any "on sale" now ?
What do you think of Ranbaxy @ 410

Sundar

Unknown!!! said...

Hey...Pantaloon at 1478/-..seems to be a good one to buy...and any comments on ITC..

Anonymous said...

Impressive list. It wuld be better if u culd update that list with the price u will pay for owning each of them :-)

Amit said...

To answer some of the questions here:
- am not very enthusiastic on commodities so cement, steel etc. don't work for me
- Pantaloons and, indeed, all retail stocks are pretty heavily priced at PEs of 40+. Sure they will go higher - but how much and for how long? Sooner or later the PEs will contract and prices will fall, even if earnings increase
- ONGC is a good bet given the prices of petroleum but only if you're still holding on from the IPO. At 1000 levels it might not be a very good buy. Plus, again, petroleum is a commodity and I don't even understand how the business works

Subu said...

I hold Wipro 70 @ Rs355. Any idea why this stock did not participated in any bull run since last one year. If you compare it's PE of around 17.87 with that of TCS (34.23) and Infy (36.89), it looks far cheap. Also growth wise, it is not lagging far behind it's peers. Any views on this..

Amit said...

Sundar,
Ranbaxy is heading in the right direction by focusing on research-based innovations, which is what I really like about the company. However, it has been floundering in recent times and it is a risk to buy shares today. I'd rather wait for a clear direction before buying, even if it means I'll get in at higher levels.

Subu,
Wipro PE is actually around 35 so it's in the thick of things. Not sure where you got the 17 figure. Perhaps you didn't account for a 1:1 bonus issue recently? That would have halved the EPS. You might be using a pre-bonus EPS value, which would lead to the lower, incorrect PE

Shankar said...

Hi Amit. Dont worry, this is not a spam comment. I did like your site and understand you have been doing some research using the tomes of the Superinvestors of Graham and Doddsville. The site is great. You can get some more insights on my blog - small2big.blogspot.com

Anyway, keep up the good work

Warm Regards
Shankar

vijayakrishnan said...

Hi Amit,
Chanced upon your site and was impressed by your stock pickings. You seem to be tracking all frontline largecaps. What about midcaps and small caps?

Here's a company I like - Astra Microwave.
Sureshot winner - PE is high at 30. They supply missiles to Army, weather control systems to ISRO and a manufacturer of Microwave towers.Growth is consistently at about 40-50%. A virtual monopoly - because of entry barrier for other companies.

Please post your comments.

alex said...

hey...im seeking a mentor..im 22 yrs old...new york....and i too want to be financially idependent