Which are the top 5 fundamentally strong stocks which investors can look at buying for the next 5 years?
I will be mentioning 7 stocks, you can choose to invest in any 5 of them.
The factors which I have taken into consideration while deciding the 7 stocks are:
  • Business relevance i.e. how well the company is equipped to manage its business combining it with the technological advancement and how proficiently will it maintain the operating margins.
  • How well diversified the company is or is planning to be in the near future.
  • Current operating performance.

    The following table provides the details for each stock:
  • *Data as of 23rd Dec 2019
    *CMP-Current Market Price/ Share
    *M-Cap-Market Capitalization (outstanding shares*price per share)
    Some of you might be confused about the terms (ROE and ROCE), so I will shed some light on them.
    ROE (Return on Equity): Return on equity is a measure of the profitability of a business in relation to the equity. ROE is a measure of how well a company uses investments to generate earnings growth.
    Formulae: ROE=(Net Income/Shareholders Equity)
    ROCE (Return on Capital Employed): Return on capital employed is a financial ratio that measures a company's profitability and the efficiency with which its capital is used. In other words, the ratio measures how well a company is generating profits from its capital.
    Formulae: ROCE=(EBIT/Capital Employed)
    *EBIT-Earnings before Interest and Tax
    *Capital Employed=Total Assets-Current Liabilities
    Most of the companies I have mentioned are at their peaks, so I would suggest that you should wait for any correction in their prices and then invest.
    All the Companies I have mentioned above have their share prices above Rs. 1000, please let me know if you want me to post another article on fundamentally good companies with share prices below Rs. 1000.

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