Stock Screener

JK Paper(Price as on August 20, 2008: Rs 30.15[NSE])

Invest for medium and long term

JK paper is a strong brand in the paper industry and has been a consistent dividend payer. Having declared a consitent divindend of over 15% over the past 5 years, it is one of the best picks in the paper industry. Based on the current price(Rs 30.15), a dividend of 1.5 Rs/share works to approximately 5% dividend yield.

Further, its sales turnover has grown consistently at over 10% for the past 5 years signifying the strong demand for its products. Operating profit has been inconsistent, however has shown a similar growth pattern as its sales.

The current inflation might dampen its expense sheet. This means for the short term, JK paper might take a hit on its profit. However, with the promise of elections and the next government assuming charge, inflation will soon be under control.

A PE of 5.2 and a BV of 52, it is one of most attractive stocks in the paper segment.

Summary: Buy between Rs 28-30 and hold for a target of Rs 50-60 in one year.

Star Paper Mills [Price as on August 14, 2008(NSE): 27.6]

Star Paper Mills can be a good long term bet, however for the short and immediate term, it looks to head lower.

An analysis of its results from year 2003 onwards shows that the demand situation hasn’t weakened over the years, which is a sign of promise. The fact that sales have grown from 158.03 cr(Mar 2003) to 211.02(Mar. 07) strengthens the fact. However, profits have declined sharply largely due to rising expenses and not because of fall in sales. From its balance sheet, it’s clear that the company is facing pressure passing on raw-material cost (and other expenses) to consumers. The situation is likely to worsen in the short term due to rise in inflation.

Summary: For the longer term (>5 years), this stock shows good promise. One can expect the stock to rebound to its 2007 highs of 90 levels. Accumulate the stock if it dips closer to 20.

Natco Pharma [Price as on August 14, 2008 (NSE): 78.7]

I am encouraged by the performance of Natco Pharma over the years. This is one stock with great future and is presently available at good valuations.

A look at sales performance from March ’04 onwards shows consistent growth of 10% and above. Expenses in comparison to sales are very much in control and this is reflected in the net profit zooming to 40.05 cr in 2008 from 13.08 cr in 2004. The other income component with respect to sales has very much been consistent – this is a healthy sign. The stock is currently available at 1 times book, which is quite cheap for a stock with consistent performance. With a PE ratio of 5.6, it’s quite a mouth watering pick!

Summary: Accumulate at current levels and hold for long term.

Site References:

1. http://money.rediff.com/
2. http://economictimes.indiatimes.com/
3. http://www.icicidirect.com/ for iCharts
4. http://reliancemoney.com/
5. http://moneycentral.msn.com/