Adding quality stocks for long term investment is always a better idea to build a stable and risk free portfolio also adding quality stocks to our portfolio would always better as the quality stocks make our portfolio stable even in the bear market.
What are Quality Stocks?
Quality stocks are meant to be a company which generates higher returns in terms of profits, generating positive cash flows from their operations, investing the portion of profits for their business growth and these stocks are more resilient in the down market. Usually these stocks will outperform in the long run due to their capability of earning profits, their long term vision and quality management.
Investing into these types of quality stocks for the long term would always be a fruitful for any investor as these stocks would make investors stress free and too profitable. If due to any reason market falls that would be a great great time to accumulate these types of quality stocks for the long term.
Also tracking these companies is always easier for an investor as their data such as balance sheets, P&L statements, quarterly results, exchange filings, conference calls data, management changes, updates of their capacities and guidance, investor presentations and many more. So that an investor can easily track them. Even it’s easy to take an exit call.
4 quality stocks for long term investment:
1. Sheela Foam Ltd
Sheela Foam Ltd is India’s leading manufacturer of mattresses. Sheela Foam is having very well known brand in it’s portfolio called Sleepwell. Sheela foam is india’s largest manufacturer of mattresses and other foam products such as cushions and other furniture. Sleepwell brand itself has 20 – 25% of market share in india.
After acquisition of its competitor mattresses brand Kurlon, Sheela foam doubled its market share to 40%. This company also has a strong presence in other countries such as Australia and Europe. This company is tryingtrying to expand their global presence as it’s acquired spain based mattresses company and also planning to increase their capacities by setting up new plants in Madhya Pradesh and Gujarat.
As India adopting modern life style and spending towards costly furniture and others is gradually increasing also if you look at the below picture we can see the growth of indian mattresses industry is growing with 11% CAGR.
Sheela Foam Ltd is looking attractive at the current market price of 1170 as it’s one of 4 quality stocks for long term investment. There is a volatility in margins but company has the potential to deliver good returns as it’s almost a debt free company.
2. CDSL India Ltd
Central Depository Services Ltd is an India’s largest depository services provider with a market share of 72%, we also call it a monopoly monopoly for time being. NSDL is also there in the same space but not listed in the markets, though there is only with 28% market share. If you can see there is big names in the promoter holdings such as BSE, NSE and HDFC Bank. CDSL tied up with Nepal stock exchange to offer their services which may helps to improve their revenues.
The growth in the participation of retailers in the Indian stock markets is biggest advantage for this company. As it’s plays the key role in transacting the shares in the equity markets. Not only the shares but also plays a vital role in transacting bonds, debentures and commercial papers.
Apart from depository and data storage services CDSL also provides repository serives for the Insurance companies, which helps and making available insurance receipts and bonds available online and to access anywhere by offering e-insurance accounts.
CDSL India Ltd is looking attractive for long term investment at the level of 1070. The risk takers can also enter at the current market price as it’s also a good zone for buying. CDSL is 2 of 4 quality stocks for long term investment.
3. Mphasis Ltd
Mphasis Ltd is mid sized IT company which has the strong presence globally across the several countries such as USA, UK and many more. This company helping many enterprises across the world to transform themselves by offering cloud and AI based solutions. The main reason for picking this stocks is the company is working on AI and it’s applications aggressively as it’s already having strong presence globally, strong client base and strong fundamentals.
Mphasis is the company which caters majorly Banking, Insurance and capital markets with it’s wide range of IT, ITes and BPO services. When it comes to IT services Mphasis has the dominant portfolio such as Blockchain, cyber security, cloud, devops, product engineering, enterprise automation, AI & Machie learning and many other services.
Mphasis has the strong presence across the world as it’s having their centres in china, india, japan, usa, Singapore, Australia, mexico, and other major countries. Though Mphasis has the strong presence in the various countries, there is a small problem that is this company is earning more than 70% of its revenues from only USA. Top global companies from banking, finance and insurance industries are the clients of Mphasis as already this company is having the access to serve the all Blackstone group companies as this is the only IT company of Blackstone group. Other complete financials of the company are here.
Mphasis is looking attractive at current market price of 1878. As Mphasis is 3 of 4 quality stocks for long term investment.
4. IDFC First Bank Ltd
The major one and only positive for the company is Shri V. Vaidyanathan sir, MD of IDFC First Bank. When he taken the responsibility of bank, he has given some guidance of the bank that the what changes he is going to make in the future. Market keenly watched the developments and started giving appreciation to the stock price and the result is what we are seeing now.
IDFC Bank still going in line with Vaidyanathan sir and gradually penetrating into retail banking, we can add this stock until it goes in line with vaidyanathan sir and the samesame should reflect in quarterly numbers. Though this company has given a decent rally for the pastpast couple of months, there is a demand zone at 70 – 74.
Conclusion:
The stocks above discussed are purely for long term as these 4 stocks are very strong both fundamentally and technically, also the above mentioned positives are additionally driving the stocks to the new heights. Can accumulate these stocks at the levels above mentioned. This is the story of 4 quality stocks for long term investment.
Above stock picks are purely educational purpose only not for any buy or sell recommendation as we are not SEBI registered, kindly contact your financial advisor before investing into any stock and add your own research.