Using common sense to invest for the long term

Got thinking this weekend about how should I plan my investment for the next 3-6 months. I do dabble in stocks for short term which are mostly based on news, intra-day calls from members on stockezy. But usually I am someone who likes to invest long term. This weekend over a cup of coffee made me think to visit some of the beaten down names in the commodity sector. 

Copper, Steel, may be building materials such as Cement. Let's Think Aloud together as to why this may be a good time to invest in companies like Tata Steel, ACC, Hindustan Copper, Sterlite, SesaGoa, Hindalco and other related companies. 

Materials of any type which help build & re-build the backbone infrastructure of our country such as roads, bridges, railway lines, ports, electrical grids, power stations all our going to be in demand. Now some may disagree but I have a reason for this. 

Now coming back to why I like commodities. One assumption I am making (which is also my risk quotient) is that I trust the government of India to execute moderately well in spending money allocated for the Stimulus Plan. We need for our government to invest in the country. 

• Move tenders to build roads, railways and ports, power stations
• This helps Engineering company's to get government orders
• To build you need construction materials
• To build you need heavy engineering equipments
• To build you need to employ labor, hence create employment

The government can use its cash reserves to fuel demand and growth and put the country back on its feet. At least to walk if not run. We may have rate cuts, we may have bailouts, we may have tax cuts - but to invest in building the country's infrastructure is the best way to stimulate the economy. I think this may be a win-win situation. 

A win for the consumer, A win for the private sector, A win for country. This may be the best time to invest for a better & bright future. 

You can read about the stocks I recommending at stockezy.com  - click here

Disclaimer - Yes this is necessary. I am no stock-pundit or analyst. I am common man who reads his newspaper, uses common sense to make investing decisions. I do see price-trends on the stock-charts available on stockezy. Try to do homework about my stocks. I am a software engineer by profession.

I am also the co-founder & CEO of stockezy.com - India's Social Investing Community. I usually blog on stockezy, but also like to share my comments here on my good friend Chirag's blog. I would love to hear from the readers of IndianMoneyPlus, you can connect with me at tushar@stockezy.com.

Cheers!

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Hotel Leela a good bet for long term.

Scrip: - Hotel Leela.
BSE Code: - 500193
CMP: - 24
52 Weeks H/L - 76.85 - 21.05

Summary -
Hotel Leela has been listed on the stock exchanges of Indian i.e. BSE & NSE since 19th of July 1995.
It is in Hospitality industry from a long Time.
The company has four fully functional hotels all over India i.e. at Mumbai, Goa, Bangalore & Kerela.
It comes in a luxury Hotel segment. Its Bangalore property has been rated as one of the best business hotel.
It current market capital is 906 crores with a PE ratio of 6.5 per share of face value of Rs.2/-.
The company is planing to double the capacity by 2010 and tripple by 2012 i.e 12 hotels in all.
Logically if it starts eight new hotels their cost of building, licensing, etc would be approx 400 crores per hotel i.e. 300 x 8 = 2400 crores.
And at present the company's market capital is 906 crores which would add 2400 crores to it.
So assume the market cap is 3300 crores approx which surely tipple the stocks value by the same period.
Another key factor is the zooming land rates in few parts and in few parts they are stable.
Development in economy and development in tourism will add to scrips hidden value.
So keeping the long term factor in mind one can accumulate this scrip at any rate within Rs.28/-.
I would keep a price target of Rs.80/- approx by the end of 2010.

Developments -
1) The company is Expanding operation by developing projects in Delhi, Chennai, Pune, Hyderabad and Udaipur.
2) Entered into a Contract for management of The Leela Kempinski Gurgaon, Delhi (NCR) 319 room, and The Leela Residences Kempinski gurgaon 90 serviced residences.
3) Additional 29 more rooms are being added in Goa and also setting up an IT park and a Commercial Complex in Chennai.

The above projects are expected to be completed by FY09 and FY10. The company plans to double it's room count after the implementation of the above projects. The company has opened sales and marketing offices in London, Dubai and appointed GSA in Singapore.

After the complete expansion in place the company's revenue is set to grow @75% p.a. The stock can prove on to be a good multibagger play.

Fundamentals -

1) The average occupancy rate is around 80%.
2) Strong presence in 5-star deluxe category.
3) Aggressive capex to add exponentially to the revenues.

Risks -

1) A slowdown in economy can reduce the occupancy rate and also the ARR.
2) Bangalore accounting for 45% of its revenues, earnings remain vulnerable to decline in tariffs and occupancies.
3) With number of luxury service apartments increasing in last couple of years, corporate occupancy is set to decline.
4) Strong rupee appreciation can offset the margin's partially for dollar based room tariff's.

Key Positive -
A dividend paying stock.
Good long term perspective.
Undervalued.
Lots of developments taking place.
Good management.

Chart Credits MyIRIS.Com

Happy Investing.

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