Aashish Tater picks 2 must-have bets for tough times

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Aashish Tater picks 2 must-have bets for tough times

Calling it a rough time to find trading opportunities in the weathered market, Ashish Tater of Fort Share Broking picks two stocks that fits perfectly as long-term bets. "If you are trying to make a portfolio beating these tough times, Balmer Lawrie and Empire Industries are the most attractively valued bets to buy into," he says.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Balmer Lawrie BSE | NSE 31/05/12 Are Mutual Funds betting on Balmer Lawrie? Other Stocks in this news Empire Industries |

Calling it a rough time to find trading opportunities in the weathered market, Aashish Tater of Fort Share Broking picks two stocks that fits perfectly as long-term bets. "If you are trying to make a portfolio beating these tough times, Balmer Lawrie and Empire Industries are the most attractively valued bets to buy into," he says.

He says people have been very complacent in shorting markets with a stop of 5020. Technically, he believe there is an inflection point of around 4,768, hence before 4,768, the market can go and test 5,020 and 5,128 on charts, he says. "These rallies are short lived and because of excessive shorts into the system, the short covering rally leaves a deep scar on bears face as well," he says.

Tater says in this market should take calls from a very longer term perspective. Talking about his multibaggers, he says, "Empire Industries is getting into the second phase of expansion in the realty business and the company is growing by 18%, which makes the stock justified at the current valuation." He says Balmer Lawrie has a highly possible growth of 14-14.5% and hence, a great buy. Also, he expects the company to post an FY12 EPS of about Rs 27.5.

On Empire Industries

Empire Industries would not be a brokerage side call because it warrants us slow acquisition from a very longer term perspective. At current levels, the stock valuations are justified looking at its lease rentals. The company would be going through the second phase of expansion in their real estate space division - Empire Plaza Phase 2. The first phase has some eminent cliental base including Network 18 group, and they would be doing good lease rentals, going forward as well.

If I take a call from that perspective, the company is gradually increasing their dividend payout because they don't know exactly how to reward their shareholders. Going forward, there could be a possible buyback on to the stock. At current levels, the company can go and give a buyback of close to Rs 950 mark before phase two starts because in next 2-2.5 years their lease rentals due to staggered growth will definitely give 18% increase in next three years with the addition of Empire Plaza 2 plus the existing lease rentals which are on upward revision.

The company would be doing close to Rs 55-60 crore. If the way the lease rental companies have actually multiplied, it's close to that 14 odd mark, which means Rs 700 crore from current Rs 450 crore - almost 60% jump in three years. It is a portfolio bet but one should not go and buy at current levels. There will be dips, bits and pieces accumulated around at Rs 630-650 levels where the downside is kept by 8-10%. However, there is a good potential upside of 50-60% in three years perspective, and also the dividends of approximately Rs 80 in three years, cumulatively.

On Balmer Lawrie

Balmer Lawrie is a definite warrant that should be a portfolio bet. I have been pushing this stock right from Rs 520 levels and even at Rs 660 I have been warranting that it should be a portfolio bet. The stock fits the dividend discount model, and perhaps is one of the traditional models used in valuing the company. The company has been increasing its dividend payout because the business is doing very well. They have been growing at 14-14.5%. They are into business of logistics and also grease lubrication which is doing exceptionally well.

In the Q1 performance, the company posted an EPS of Rs 27.50. For full year, we expect an EPS of close to Rs 100. The company may give a dividend of Rs 172 to Rs 180 in next five years, cumulatively. The company has already shown a 30% jump, which means that dividend payout can increase further. We have an dividend estimate of Rs 33 for next year.

The stock is attractively valued at current levels, available at 5% dividend yield. Going forward, the stock is bound to do well. In testing times like these, if some one wants to make a portfolio, Balmer Lawrie warrants creeping acquisition. It is a good safe stock from longer term perspective.