Stocks from our Street Beat section were up 50% and those from our Cover Story of 20 March 2014 were up 79% in one year. From this issue, we are closing the Street Beat section and model long-term portfolio
31 March 2015, rose on an average of 50% (since the date of recommendation) when the Sensex rose just 15% on an average. Cover Story stocks managed to give an average return of 79% when the Sensex managed to gain 28% for the relevant period. An ‘active stock’ refers to a stock which has not been exited up to 31 March 2015. Our Street Beat section focused on many small-cap stocks because these are not tracked by analysts and fly below the radar of institutional investors. Such stocks had a great run in 2014. Here is our report card.
Of the 26 stocks recommended in our Street Beat section, four stocks were exited at profit. Aarti Drugs, mentioned in our issue dated 3 April 2014, was added on the merits of the company’s ability to launch bulk actives at low cost and provide contract research and manufacturing to partners in the developed markets. This stock was added at a price of Rs263.30 (when it was trading at a price/earnings of 5.95). Within a span of four months (18 July 2014), the stock reached at PE of 11.72. This was close to its highest PE (10.78) since September 2005. We booked a profit of 127%.
Similar was the price performance of Aarti Industries which was exited at profit of 65% (issue dated 7 August 2014) as it came close to its highest PE level since June 2007. PBM Polytex, a cotton textiles company, was added in our issue dated 15 May 2014 when it was trading at Rs57.50. The stock soon surged from this level to Rs93.05 on 12 September 2014. We exited from the stock, in our issue dated 16 October 2014, booking a profit of 31%. At the time of exit, it was trading at PE of 3.41 which was its highest since September 2012. APM Industries, yet another textiles sector stock, which is into manufacturing and marketing of synthetic blended yarn, surged 55% from the time we added it. We exited at a profit of 36% in our issue dated 16 October 2014. The stock hit its highest PE of 3.91 since June 2009. Grindwell Norton, which was added in our issue dated 13 November 2014, never hit its recommended price.
Of the remaining 21 stocks, our assessment went wrong about Jaysynth Dyestuff which was recommended when it was trading at Rs61.85. From there, it went to hit its 52-week high closing at Rs69.80 on 27 August 2014. However, deteriorating fundamentals pulled the stock to its 52-week low closing at Rs33 on 26 March 2015. It was trading 44% below its recommended price on 31 March 2015.
There were a few more in this category, namely, National Peroxide, Kirloskar Pneumatic and MOIL which closed lower on 31 March 2015. National Peroxide rose 34% by January 2015 from the recommended price but since then, the stock moved down. Excel Crop Care, technical-grade manufacturer and formulator of agro-inputs, was mentioned in our issue dated 16 October 2014 at Rs900. The stock hit the price on 9 February 2015. By 19 March 2015, it rose 8%. The five stocks which closed lower were, on an average, down by 15%.
As many as 16 stocks surged an average of 70%. Acrysil, aspiring to become a one-stop lifestyle kitchen products manufacturer, was added when it was trading at PE 9.78. By September 2014, it surged to a PE level of 31.69. At the end of March 2015 (based on four quarter trailing net profit for quarter ended December 2014), the stock was trading a PE of 28.11. This is among the top two gainers (204%) in our list. Finolex Cables, the top gainer in our list, closed 238% up. The lowest gainer has been Navneet Education which gained 4% since it was recommended.
Our cover story of 20 March 2014 on stocks with dividend yield worked out very well. These stocks delivered 84% returns (79% on price and 5% on dividend). Of the 11 stocks only Andhra Bank did not declare dividend between 1 April 2014 to 31 March 2015. Akzo Nobel paid the highest dividend of 750%. It delivered 87% (inclusive of dividend).