Wednesday, March 28, 2012

>INDIAN LEADERS & LAGGARDS: Present the top and the bottom quartile of stocks from all major sectors as per “greatness/ structural strength” scores

Why focus on sector level leaders and laggards?
Whilst our “ten baggers” note lists long term investments, investors looking to comply with sectoral benchmarks usually have to focus on identifying the best plays in each sector – ignoring large sectors such as Automobiles or Metals (just because it does not have a representative on the ten bagger list) is not an option for most investors.

Secondly, sectors that are cyclical and hence more volatile in nature necessarily stand to get punished in our “greatness” framework (which penalizes stocks whose fundamentals show volatility). However, such sectors might present tactical opportunities depending on where we are in the economic cycle. Identifying right bets from such cyclical sectors is therefore important.

Finally, identifying candidates for shorting (i.e. using our model to identify firms at the other end of the “greatness” spectrum) also becomes feasible given our latest approach of identifying sector level laggards. 

The strongest leaders and the weakest laggards from our model.

Since by definition, each sector is bound to have top and bottom quartile stocks, a more time efficient way to view the world is to look for:

■ Top quartile stocks as per our greatness model which also appear in the top half of their sectors in our forensic accounting model: Mcleod Russell, Hero, Exide, Elgi Equipment, Cummins, Jyoti Structures, Shree Cement, Castrol, Nava Bharat Ventures, Sadbhav Engineering, Deepak Fertilisers, Coromandel, Zydus Wellness, GSK Consumer, Nestle, ITC, Supreme Industries, AIA, Sterlite Technologies, Bajaj Electricals, CMC, Oracle, Tech Mahindra, Jagran Prakashan, Bhushan Steel, Cadilla Healthcare, Lupin, Aurobindo, Mahindra Lifespace, Oberoi Realty, Prestige Estates, Phoenix Mills, Jubilant Foodworks, Titan, Idea, JBF, Tata Power, Gujurat Gas and Neyveli Lignite.

 Bottom quartile stocks as per our greatness model which also appear in the lower half of their sectors in our forensic accounting model

To read full report: LEADERS AND LAGGARDS