Short Listing Five Small Caps for Potential Long Term Investments
I am continuing to keep looking for good companies and prepare my watch list. Keeping with this thought process; I looked at few stocks in small cap domain and applied my screening process. I have short listed following five small cap companies that I believe warrant further detailed analysis in the context of my buying objectives.
Aegis Logistics Limited, (AEGISCHEM): The company is focused in supply management of oil and gas logistics. Liquid Terminal Division provides storage and terminal facility for oil and chemical products. Gas Terminal Division provides imports, storage, and distribution of petroleum products like LPG and propane. It services are related to sourcing of product, storage and port operations, arranging road and pipeline movement, shipping, and integrated supply chain management. This is a small cap which has potential for long term buy and hold because it operates in infrastructure sector and good financial management.
- Operating Cash flow (positive, growing trend)
- Debt (Yes, and very close of operating cash flow, but manageable)
- Dividends (yes)
- Reported Net Profit (positive, increasing trend, and tends to be below operating cash flow)
- Margins (in low teens)
- Capital Usage (in low twenties)
Banco Products (I) Limited, (BANCOINDIA): It is supplier of engine cooling components and engine sealing gaskets to the automotive and industrial engines. Its products include radiators, intercoolers, oil-coolers and many different types of engine gaskets.
- Operating Cash flow (overall flat, negative once in last five years)
- Debt (high, more than operating cash flow)
- Dividends (yes)
- Reported Net Profit (positive, increasing trend, and less than operating cash flow)
- Margins (high single digits)
- Capital Usage (twenties)
Graphite India Limited, (GRAPHITE): The Company is the largest manufacturer of graphite electrodes (90% of the revenue). It also provides impervious graphite equipments and GRP/ERP pipes and tanks (10% of revenue). It end customers, and applications are in metallurgical (ferrous & nonferrous), chemical and process, and aerospace industry.
- Operating Cash flow (overall increasing, but reduced in 2005, 2006, 2007)
- Debt (very high, and less than cash flow)
- Dividends (yes)
- Reported Net Profit (positive, and below operating cash flow for last four years)
- Margins (low twenties, and increasing trend)
- Capital Usage (high teens)
Indraprastha Medical Corporation Limited, (INDRAMEDCO): It is a Delhi-based healthcare company which operates through Indraprastha Apollo Hospital. It is the largest corporate hospital in India. The group owns 12 hospitals and four clinics. It offers a range of diagnostic, medical, and surgical facilities for the care of its patients. In addition, it also provides diagnostic services, ambulance and air ambulance services, and out patient consultation services. In my view, Indraprastha is a pioneer in corporatization of healthcare services.
- Operating Cash flow (positive, flat, but growing for last two years)
- Debt (Yes, and on many occasions more than cash flow)
- Dividends (yes)
- Reported Net Profit (positive, flat, and below operating cash flow)
- Margins (high single digits)
- Capital Usage (high teens)
Numeric Power Systems Limited, (NUMERICPW): It provides power continuity and clean power through its total power management solutions. The product portfolio includes uninterrupted power supply (UPS) systems, servo stabilizers, isolation transformers, inverters, DC power, custom-built power conditioners, power quality management products, active harmonic conditioners, and AC-DC converters. In addition, it also undertakes contractor projects to offer end-to-end solutions in SCADA/EMS packages, power transmission support systems, large network of industrial process, and distribution management.
- Operating Cash flow (increasing trend)
- Debt (low and flat)
- Dividends (yes)
- Reported Net Profit (positive, increasing, but above operating cash flow)
- Margins (low teens)
- Capital Usage (mid-to-high twenties)
It will take me some time to read about these companies and come to any sort of conclusion. I will post my views one company at time. Meanwhile, I would also like to know your thoughts on above companies. So you may either leave your message below, or send me an email using the Contact Me form.
Arungsg, Raju, and Student of Market thanks for your suggestions.
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Aegis Logistics Limited – I guess is the only candidate in the list, which might fit into your category (not 100%). they have the starter benefit of the liquid transportation business… also the expansion plans looks promising.
Hello Young,
Thanks for sharing the observation about starter benefit. I will keep that in mind while reading about it.
Best Wishes,
i own Numeric Power Systems. Its product portfolio is very well positioned to meet the power demands of our country which is always short of electricity. i think this is a potential multi bagger for buy and hold investor. it has diversity of products, it revenue come from internal to the county and not export depended. it has low debt too.
i am waiting for your analysis of this company. I am planning to increase my investment in this one.
I own Numeric, too & my analysis is somewhat similar to Rutwik’s. Co-incidentally, I also bought Satyam last december 30/31 at 170+ and on Jan-7, Raju’s revelations blew my investment by 90% in one week!
So we seem to share some similar stories.
Cheers,
Arun
Rutwik/Arugsg/TIP Guy/Anonymous/Aditya, all like it. pretty good consensus to arrive at.
Rutwik,
Good points, I will keep that in mind while reading about it.
Best Wishes,
@Tip guy, this is my first visit. you have awesome thing you have going here.
my vote goes to aegis logistics and numeric power systems.
this is first time i m hearing about of banco products.
Hello Anonymous,
yeah numeric and aegis seem to be popular.
Thanks for stopping by.
Best Wishes,
I would prefer to invest in Aegis logistics and Numeric.
Thanks for sharing this.
Hello Aditya,
Yes, Aegis and Numeric seem to be popular.
Best Wishes,
Can an Individual Retail Investor invest in equity shares of foreign company’s
Can I as an individual invest in shares listed in say Singapore or say Hongkong for that matter???
Hello Karan,
You are looking for ability of individual retail investors to buy/sell on foreign stock exchanges.
I do not know. I am not aware of any such possibilities.
If you do find out, I would certainly like to learn and know about it.
Best Wishes,