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Last Updated : Jan 18, 2019 01:28 PM IST | Source: Moneycontrol.com

Contrarian investing: Motilal Oswal says don’t ignore low PE stocks; 10 buy & sell ideas

Neutral-to-moderately popular stocks outperformed significantly when compared to the most popular stocks in the December quarter, according to a report from Motilal Oswal on contrarian investing.

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If you thought only popular stocks made money for investors, this might come as a surprise. Neutral-to-moderately popular stocks outperformed significantly compared to the most popular stocks in the December quarter, according to a report from Motilal Oswal on contrarian investing.

In Q3FY19, neutral-to-moderately popular stocks performed the best, significantly surpassing the performance of the benchmark (BSE-100). The most popular stocks came in third, while the second-most popular stocks performed the worst, it said.

The report further added that out-of-favour low P/E stocks delivered disproportionate returns, significantly outperforming the benchmark. In contrast, the performance of high P/E stocks was dismal.

Similarly, out-of-favour low price-to-cashflow or P/CF stocks delivered disproportionate returns, again significantly outperforming the benchmark.

In contrast, the performance of high P/CF stocks is dismal. In Q3FY19, high P/CF stocks delivered the best returns, while the low P/CF stocks came in third.

The findings from the Motilal Oswal report suggest that simple strategy of investing in stocks for which analyst consensus has changed from net sell to net buy with a holding period of one year has delivered 21.1 percent annual returns over the last 10 years.

Top Contrarian buys or sell ideas:

The domestic brokerage firm highlighted its top contrarian Buy and Sell picks based on various themes such as popularity, relative valuations, net sell to net buy, consensus sells.

Top contrarian buys include stocks like ACC, Ashok Leyland, Bharti Airtel, Bank of Baroda and HPCL. And top contrarian sells include Bajaj Finance, Kotak Mahindra Bank, Tata Power, and Zee Entertainment.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Jan 18, 2019 01:28 pm
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