Midcaps with long term perspective; 4 stocks with high ROE & net profit margin

Capital good companies had faced tough times for many years. Given the fact that hardly any capacity buildup was taking place in any industry, a number had to change their product portfolio and had to live with very low margins. But all the efforts have now started to show some results. Given the performance of the stock, a large majority of these stocks have hold recommendations from the analysts.

Every business has its own capital requirement matrix and this is what makes them prone to risks of interest rate cycle. Of all the stocks, which our algorithms come up with, we took companies from three sectors. On the list, there is one of the biggest wealth creators from the specialty chemical space. ET screener powered by Refinitiv’s Stock Report Plus lists stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy .

Every industry has different operating conditions which have high correlation with the kind of ROE they generate and how sustainable that number is. Of all the stocks, which our algorithms come up with, we took companies from three sectors, biologics, engineering and an auto ancillary company which is focussed on EV space and has been able to get an early lead. ET screener powered by Refinitiv’s Stock Report Plus lists down stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy .

Stocks with high return on equity and net profit margin, institutional ownership of at least 10%, and minimum upside potential of 10% are considered in the list of 5 midcap stocks. CMS Info Systems, engaged in cash management; Mahindra Lifespace Developers, a real estate development firm; Emami Limited, a fast-moving consumer goods company; and Home First Finance Company India, engaged in lending, are some of the selected companies. Stock Reports Plus, powered by Refinitiv, generates standardized scores for each of the five key components using a quantitative analysis to help investors make informed investment decisions.

When valuations are high and sentiments are bullish, it would be better to add the word “ caution” to your portfolio. Now how does one do it ? By putting some quantitative parameters when making a decision to buy a stock. Refinitiv’s Stock Report Plus which lists stocks with high upside potential over the next 12 months, having an average recommendation rating of “hold” or “buy” or strong buy .

It is not very common to see tailwinds emerging for an industry at a time when it is ideal to own stocks from that space. But in the case of pharmaceutical companies, tailwinds have emerged at a time when valuations of the overall market are expensive and it makes sense to look at pharma stocks as they tend to act as defensive stocks in volatile times with bearish bias. However they should not be clubbed together; each company has its own operating matrix. A company which has a strong domestic brand in the generic drugs segment, will not be getting impacted by what is happening in the US pharma market or what USFDA does. But yes, if it might be impacted by what happens in China.

India experienced a sharp rise in heat wave days in 2022, recording the highest number of such days in a decade, according to the Ministry of Statistics and Programme Implementation. The country had 190 heat wave days in 2022, more than six times higher than in the previous year.

While Sensex ended 728 points higher at 66,902, Nifty advanced 207 points to end at 20,096 as investors turned attention to bluechip stocks. Fed governor Christopher Waller has flagged the possibility of lowering the interest rate in the months ahead if inflation continues to come down. Traders are now pricing in a more than 70% chance of rates easing in May, compared with a 50% chance on Tuesday, CME's FedWatch Tool shows.