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updated on 13 June 2017
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Who says high priced stocks won't give returns, these 9 stocks priced above Rs 10000 given 5,000 percent return in last 5 years
The year 2017 has been lucky for old as well new investors as benchmark indices have already given a return of over 17 percent so far. But, the story is worth talking if you are an old investor and followed ruled of value investing.
Old-school companies have given a return of up to 5,000 percent in the last five years and are now trading over Rs10,000 per share. For some, this price tag could be termed expensive, but merely price is not the sole criteria to determine valuations.
High-value stocks may not always be expensive just like penny stocks may not always be cheapest or best choice to buy. One has to do careful analysis based on fundamental research before making an investment decision.
Nine stocks which cost above Rs 10,000 a share include names like Polson, Eicher Motors, Shree Cements, MRF, Page Industries, Honeywell Auto, 3M India, Rasoi, and Bosch.
A stock like MRF which rose nearly 600 percent in the last five years now costs over Rs 70,000 per share. An investor could buy a two-wheeler or a motorcycle for the same amount.
Polson which was a three-digit stock five years back now trades at Rs11000 a piece. The company Asia’s largest manufacturer of vegetable tannin extracts and toll manufacturer of synthetic tanning agents, fat liquors and intermediates for the leather chemical industry.
Are these high priced stocks sounds expensive, let's check out
Looking at high-value stocks just on the absolute price may not be the correct way to look at the stocks. For Ex. MRF trading at an absolute price of Rs 73,000 may mean to spend a lot of money on buying a single stock and it may sound like an expensive stock, however it is trading at the PE ratio of 21x of its FY17 earnings which are in line with its peers
Eicher Motors which has a single share valued at Rs 29,300 but its PE ratio on FY17 earnings works out to be 47x, which is at a premium to its peers due to its superior margins and strong growth record
Well, just looking at the price tag investors avoid term high-value stocks because they them as expensive stocks. The attention should be on valuation than the price because if the conditions remain favorable, these stocks will continue to provide good returns.
A high-value stock should be looked from an investment point of view rather than from a trading perspective because of low liquidity. If the company’s fundamentals are strong and valuations continue to be attractive, then it is best to remain invested in the stock