They believe bear the hidden treasures Dalal Street. While investors lowland floor mat jewels of the stock market, brokers say there are a lot of money to do if you recognize these stocks early. No prices guess that it is a deep value of the stocks, which can do wonders, in his portfolio when the market re-evaluated.

According to analysts, the deep value of the shares can be defined as something that is cheap compared to the margin of safety to limit stock losses, when the error occurred. Let's Get an overview of how to identify these stocks, which should be ideal for your wallet, and the reasons for the low scores on the market.

Sleeping Giants

They, like any other stock in trade, but this is not hypothetical for their understanding. Some merchants on the Paris stock exchange even call these stocks as a "sleeping giant".

There are two ways you can determine deep value stocks.

First, that Benjamin Graham recommends to protect the rights of investors in his classic 1949 - that the share price should not exceed 15 times the average earnings per share in the past three years and total portfolio Parliament should no longer as the 13th Or

Secondly, the stock should be less than 10 years, the average PE. Other things in mind, companies have a long history of consistent earnings growth and regular dividend payments, and that not all shares are very cheap to identify. He believes that the PSU banks as East Bank of Commerce, the trade is to 5.6 PE at a price of 240 rupees for FY09, is an excellent example of deep value stocks. "In a growing economy like India, banks are obliged, since the GDP is rising," he reasons.


These stocks are usually ignored in the stock markets. The best (or worst word May), is that people know that this is a great history, but they do not want to touch. If you saw the real estate boom in India five years and bought Unitech, his portfolio will increase phenomenal.

What the distribution of portfolios, the analysts believe that investors can invest 80% growth stocks and 20% of the value of shares (after a bit of money to maintain balance or investment in fixed-income instruments). In the case of purely deep value investor, typically 80% of investment funds should invest in these shares and 20% of the funds should be used for fixed-income instruments or cash. "However, hybrid investors must follow the strategy between them. The basic principle of control of the Pareto Principle - 80/20 rule.

Notes sowing harvest

Although the views of the ideal investment horizon, most analysts agree that there should be no less than a year, which may extend to three to five years to harvest. The first thing an investor should do is a miracle if he speculator or investor. "If it's a speculator, there was no chance for his stay in these stocks. If it is an investor within three to five years, is something that makes sense. However, if measures are not required to even after accounting for three years it is little more than l 'own understanding of the stock. In such a case, you could sell stocks and switch to something else. However, if there are reasons, you can continue to hold shares.

On the reasons why these stocks ridiculously low estimates of the market sometimes tends to forget. And as a rule, these stocks are not popular with brokers. In addition, analysts explain that there may be reasons, such as high transaction costs (mini-caps may affect transaction costs higher than 30-50%) and fear of uncertain events or macroeconomic conditions, adverse conditions such as growth in oil prices and interest rates, government policy, etc. . You must also understand that fear is still in the short term. And that is why it is low visibility in the future, even if the overall picture remains unchanged in these cases.

Mat GEMS

Here are some deep-value stocks, experts believe that the great potential

ONGC - Lozha is located in a sector, the strategic character has a good history of profitability and dividends and trade relations estimates ridiculous.

Mahindra and Mahindra and Renault - the industry is experiencing a phase of growth in India, in contrast to the saturation phase in the Western world - trade at about 10 PE for FY09

Fiscal improvement of the local Housing Finance - a society increasingly PE 25-30% to a 7x for FY09 and EPS of 55 rupees. The costs in the company's FY09 R 260 and the Regional Office for Europe, 20% (if not dilution)

Birla Corporation, cement and India - Trading single price for several FY09. Total spending on infrastructure is about $ 500bn in 12 five-year plan, and we are far away from the opportunities in China

HDIL - This trade substantial discounts. Branch infrastructure with great visibility and opportunities for growth in target markets, where the cost of leisure.

SBI - The stock trading in a single figure for FY10E diverse. In addition to the more important of bank holding companies, is also a factor x - assessment of human resources.