Wednesday, November 23, 2011

>INDIA STRATEGY: India’s Future Large Caps

We have used a combination of quant and our analysts’ opinion to filter Morgan Stanley’s best mid-cap picks (market cap

Over the long term, stocks down the cap curve tend to outperform their larger brethren: Valuation and performance make the case in favor of these stocks.

A combination of analyst opinion and quant: Our quant technique combines institutional ownership, consensus ratings, price momentum, earnings growth, revisions, trading volumes, valuations and ROE to score stocks. We overlay our analysts’ opinion on these metrics to generate our best ideas.

In general, we prefer stocks that are:

• Unloved: Trading significantly below 200 DMA with depressed trading volumes vs. history

• Under-owned: Rated poorly by the consensus and not owned by institutions

• Undervalued: Valuations cheap in the context of ROE versus history

• But with improving price momentum… Poor 12M performance but rising 1M returns

• …and earnings estimate revisions not priced in: Earnings estimates rising – but not share prices

To read the full report: INDIA STRATEGY