So Sensex rose just 40% in next 4 years and KPR Mills rose 1700 % !!! ….
And this price rise is not because of market rise…. In the next 4 years, stock rocketed from 121 to 1750 (taking 1:1 split into factor) !!!! …. I told this new found gem to all my followers at Facebook (All messages are saved of 2014)….
So I bought the stock heavily in next few days…. If I am convinced then I take positions even if the whole world is against me…. I only need my own conviction about a stock to take position…. Those who know me know that I always play a lone hand in stock markets…. But I could not ignore the company because its fundamentals were very sound and current price did not justify its fundamentals…. Nobody agreed with me and they also gave some investing lessons to me about Blue Chip companies…. None of my investors friends even heard this name and when I told them about my new found Gem… I told them that I am going to take a major position in the company…. Trading volumes very less and the company was listed on BSE only…. The more I researched, the more great the business of company looked to me and more undervalued it seemed to me…. I went in further depth and did some more research …. When I studied the company, it looked me extremely undervalued…. In April 2014, I gave very strong fundamental buy call at KPR Mills which was trading at 121…. Things become very easy when understood through a practical example. Let us understand the point through a practical example below…. But they have good business model, good margins, good future potential… Only thing is that they are not in limelight because investors are falling on each other to buy Blue Chip stocks…. Generally these type of companies are not very big…. Money is made by buying Good companies which are not famous, not tracked by research houses and investors…. So how can then a retail investor make money? Read on … Even if a Blue Chip company is going to post 100% growth every year in next 3 years, it is not a Great Investment because all that growth potential is factored in the current price…. So all the future potential of those companies are factored in the current price….
Blue Chip stocks are tracked by many stock research houses, stock analysts, HNI, Mutual Funds, FIIs…. Because Blue Chip companies are very less likely to be undervalued…. So coming to the main point as why I do not like Blue Chip companies…. So a Good Investment means a Good Company available at undervalued price. And if a Good Company is trading at above the fair valuation, it even becomes a Bad Investment !!…. If a Good Company is trading at FAIR valuation, it becomes just an average investment…. But they all miss the most important point to be remembered in Investing…. When I ask investors why they invested in a particular company, they start telling the positive things about the company…. There is a difference between a Good Company and Good Investment which most of retail investors do not understand…. Why?īecause a Good Company does not necessarily mean a Good Investment…. But do these factors make Blue Chip companies a Great Investment also? My answer is - No …. All these are positive factors of Blue Chip companies compared to mid cap stocks and small cap stocks…. Blue Chip Companies have a big market cap, good brand value, a lot of customers, provide good liquidity in stocks, provide good turnover in trading, Tracked by all Stock Research houses etc ….
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