These 5 stocks are in strong momentum. Good time to add?

Summary

In this video, Akshat Shrivastav discusses momentum stocks and why certain stocks, despite recent run-ups, are not yet overvalued. He analyzes specific stocks like Whirlpool, Fine Organic, HDFC Bank, and Bandhan Bank, explaining their momentum and market conditions. Akshat emphasizes the importance of understanding technical patterns, market trends, and the concept of risk-adjusted reward in stock investment. He also highlights the potential of consumer durable companies in the coming months and advises viewers on how to manage their portfolios based on their risk appetite.

Takeaways

• 📈 Stocks in momentum: Akshat explains why certain stocks are currently experiencing momentum.
• 💡 Not overvalued: Despite their rise, these stocks are not hyper-overvalued.
• 🔄 Example: Whirlpool saw a 12% increase in a single day after his post.
• ⚠️ Disclaimer: The video is not a push to buy these stocks but an explainer on identifying momentum.
• 👨‍🏫 Framework: Akshat provides a framework to identify and add momentum stocks to your portfolio.
• 📊 Market view: The market has recently seen a breakout, turning resistance lines into support.
• 📉 Downside risk: The immediate downside risk is capped, barring major news.
• 📉 Trend analysis: Akshat discusses the trend and market cap of certain stocks like Zudio, comparing their profit margins.
• 📉 Stock analysis: He analyzes specific stocks like Fine Organic, HDFC Bank, and Bandan Bank, highlighting their momentum and profitability.
• 🛠️ Portfolio management: Akshat advises on managing your portfolio according to risk appetite and understanding the concept of risk-adjusted reward.

Q & A

What is the primary purpose of the video?

The primary purpose of the video is to present an explainer on how to identify momentum in particular stocks and decide whether to add these types of stocks to one's portfolio.

Who is the speaker in the video?

The speaker is Akshat Shrivastav, who has worked in the finance/consulting domain for the last 14 years and currently runs a hedge fund.

What example does the speaker give to illustrate a stock's momentum?

The speaker mentions Whirlpool, which gave a 12% run-up in a single day, as an example of a stock in momentum.

What disclaimer does the speaker provide regarding the stocks mentioned?

The speaker emphasizes that the stocks mentioned are just examples and not a push for viewers to buy them. The intent is to provide a framework for viewers to pick stocks on their own.

What is the significance of a breakout in the market according to the speaker?

A breakout signifies that a resistance line turns into a support line, indicating potential upward movement in the market.

What major downside does the speaker mention for the market in the short term?

The speaker mentions a potential fall of 1.3% as the first major downside to the market in the short term, unless a major news event occurs.

What technical pattern does the speaker describe for identifying stock momentum?

The speaker describes drawing technical chart patterns that indicate momentum, such as specific trends and target price computations.

How does the speaker compare different types of retail businesses in terms of profit margins?

The speaker compares non-luxury retail businesses like Zudio, which have lower profit margins (10-15%), to luxury retail businesses like Apple, which have higher profit margins (50-60%).

What is the speaker's view on consumer durable companies for the next 6-12 months?

The speaker believes that consumer durable companies are likely to perform well in the next 6-12 months due to recovering consumer demand and potential interest rate cuts.

What advice does the speaker give regarding portfolio building and risk management?

The speaker advises viewers to build their portfolios according to their risk appetite and to understand the concept of risk-adjusted rewards, noting that small cap returns cannot be expected from investing in large, stable banks like HDFC Bank.

Outlines

00:00

📈 Understanding Momentum Stocks

The speaker explains why certain stocks are currently experiencing momentum. He emphasizes that this is not a recommendation to buy these stocks but aims to provide a framework for identifying momentum in stocks. He introduces himself as Akshat Shrivastav, a finance professional with 14 years of experience, running a hedge fund. The video aims to help viewers improve their investing skills by providing fundamentally-driven analysis.

05:00

📊 Market Trends and Predictions

The speaker provides a market overview, explaining recent breakout trends and resistance points. He highlights the potential impact of major news, such as interest rate cuts or political changes, on market movements. He also discusses the current state of the market, emphasizing the importance of understanding resistance and support lines in predicting market behavior.

10:06

🛒 Portfolio Management and Stock Analysis

The speaker advises viewers on managing a profitable portfolio, focusing on the importance of understanding what they are holding. He analyzes stocks like Zudio, explaining the low profit margins in non-luxury retail compared to luxury brands. He also discusses stocks like Fine Organic, highlighting the technical patterns and momentum driving their current performance.

15:08

🏦 Banking Sector Insights

The speaker delves into specific banking stocks, analyzing HDFC Bank, Kotak Bank, and Bandhan Bank. He discusses the PE ratios, profit trends, and succession issues affecting these banks. He emphasizes the importance of understanding the fundamental performance and potential growth of these stocks, despite market fluctuations.

🔍 Evaluating Consumer Durables

The speaker examines consumer durable stocks like Whirlpool and Voltas. He explains the impact of pent-up demand and high interest rates on these companies. He predicts that consumer durables will benefit from improving market conditions in the next 6-12 months, making them a good addition to a portfolio.

📅 Risk-Adjusted Rewards

The speaker concludes by stressing the importance of understanding risk-adjusted rewards when building a portfolio. He advises viewers to tailor their investments according to their risk tolerance and to differentiate between small-cap returns and more stable investments like HDFC Bank. He invites viewers to join his educational community for more insights and analysis on momentum stocks.

Keywords

💡Momentum stocks

Momentum stocks are shares of companies that are experiencing an upward trend in their stock prices due to positive performance indicators. In the video, the speaker discusses why certain stocks, like Whirlpool, are in momentum and the reasons behind their recent price increases.

💡Overvalued stocks

Overvalued stocks are those that are trading at a price higher than their intrinsic value, often indicated by high price-to-earnings (PE) ratios. The speaker explains why some stocks, despite being in momentum, are not considered hyper-overvalued by the market, using examples like Whirlpool.

💡Technical chart patterns

Technical chart patterns are graphical representations of stock price movements used to predict future price behavior. The speaker uses these patterns to illustrate why certain stocks are in momentum and provides an example with the technical pattern of Fine Organic.

💡Resistance and support lines

Resistance and support lines are levels on a stock chart that act as barriers to price movements. A resistance line prevents the price from rising further, while a support line prevents it from falling. The speaker describes a market breakout where the resistance line becomes a support line, affecting future market movements.

💡Profit margins

Profit margins are the difference between the cost of producing a product and its selling price, expressed as a percentage of sales. The video contrasts the low profit margins of non-luxury retail brands like Zudio with the high margins of luxury brands like Louis Vuitton, explaining the implications for investors.

💡PE ratio

The price-to-earnings (PE) ratio is a measure of a company's current share price relative to its per-share earnings. The speaker discusses the PE ratios of various stocks, such as Trent with a high PE ratio of 215, and how it affects investment decisions.

💡Consumer durables

Consumer durables are goods that have a long lifespan and are used over time, such as appliances and electronics. The speaker mentions companies like Whirlpool and Voltas, explaining how pent-up demand and interest rate changes impact their stock performance.

💡Interest rate cuts

Interest rate cuts refer to reductions in the benchmark interest rate by central banks, which can stimulate economic growth by making borrowing cheaper. The speaker suggests that potential interest rate cuts could positively influence market momentum and stock prices.

💡Risk adjusted reward

Risk adjusted reward is a concept that measures the potential return of an investment relative to the risk taken. The speaker advises viewers to consider this when building their portfolios, emphasizing that different stocks carry varying levels of risk and potential reward.

💡Succession planning

Succession planning involves preparing for future leadership changes in a company to ensure continuity and stability. The video discusses Bandhan Bank's succession issues and how the founder's efforts to build a succession plan impact investor confidence.

Highlights

Explanation of why certain stocks are in momentum.

Discussion on why these stocks are not hyper overvalued.

Whirlpool experienced a 12% run-up in a single day.

Introduction of a framework to figure out momentum in stocks.

Disclaimer that examples used are not recommendations to buy stocks.

Overview of Akshat Shrivastav's background in finance and hedge fund management.

Explanation of market resistance and support lines.

Discussion on the impact of major news like interest rate cuts or political changes on the market.

Advice on reinvestment opportunities and managing profits.

Analysis of stock trends and market cap, using examples like Zudio and Apple.

Comparison of profit margins in luxury vs. non-luxury retail.

Technical pattern analysis for stocks like Fine Organic.

Assessment of stock momentum and revenue trends.

Detailed look at stocks like HDFC Bank and their PE ratios.

Impact of succession plans on stock performance, using Bandhan Bank as an example.

Discussion on consumer durables and their market performance.

Explanation of pent-up demand and its effect on companies like Whirlpool.

Prediction that consumer durable companies may perform well in the next 6-12 months.

Advice on adjusting portfolios based on risk appetite and stock types.

Final note on the importance of understanding risk-adjusted rewards in investment.

Invitation to join the educational community for more insights and part 2 of the analysis.

Transcripts

. This is a post that I did on my member

community two days ago explaining why these stocks are in a momentum.

That's part A.

Part B is that why are still these not hyper overvalued stocks because a market.

These stocks have also started to give a very good run-up.

For example, Whirlpool, in a single day, it gave like 12% run-up after this post.

Now, this is not a push that you go and buy these stocks.

But what I'm going to do on this video is that I'm going to present an explainer how

you can figure out momentum in a particular stock,

whether it makes sense for you to add these type of stocks in your portfolio.

Just a very quick disclaimer, these are just examples I'm using.

This is not a push,.

No, I will give you like framework

structures so that you can go and pick some stocks on your own.

That's the idea. That's the intent with which I'm teaching.

For people who are new to my channel, my name is Akshat Shrivastav.

I have worked in the finance/consulting domain for the last 14 years.

I now run a hedge fund.

I went to I at business school.

I have managed a fairly big portfolio.

I continue to show its performance.

So in case you are interested in improving your investing style, investing skill, I

make these type of fundamentally-driven videos and you can choose to subscribe.

So with that said, let's begin.

And first and foremost, let's do a very quick market view.

I've been explaining it for the last few videos.

So basically what is happening is that this channel is being followed..

And then finally, there's a breakout here.

Now, which is very nice because whenever there is a breakout, it means that this

particular resistance line turns into a support line.

The market might move up like this and

then it might fall, but this becomes like a support point.

This is typically where the market is likely to fall further in the future.

But as of now, the first major downside to

the market is capped due to this new resistance.

And fall, in the absolute immediate short term, so this fall is 1.

3%..

If some Unless a major news comes, then it might fall here also.

This becomes your second resistance point, all that stuff.

But the chances are, let's see, this channel is likely to be respected.

Unless

a major positive news comes, then it break and then a new channel might be formed.

For example, this positive news could be interest rate cuts.

And this is on the cards.

This may be possible.

If Donald Trump comes back to power in the US, that's good for the market for

whatever reason, depending on your political ideology and all that.

But these are all positive news for the

markets, which can definitely get triggered in the next 6-7 months.

So please remember this because people right now are super eager..

We are now at 1.

4 CR portfolio.

We are very, very quick commentary there.

That okay, if you have very good Where will you rotate this money?

That's the major headache that people are having right now.

Therefore, on the second part, I'm going to quickly help you understand if you're

looking at reinvestment opportunity, then where you could potentially look at.

What is it that I'm doing? I will also reveal.

And maybe if you guys like this video, then I might make a part two.

So on that spirit, let me just quickly

analyze a few key stocks right in front of you.

For example, what do you want to do?

First of all, if you're sitting on 40% profit on your portfolio, just because

you're on 40% portfolio, don't get out of it.

Look at what you are holding.

What does your portfolio look like?

So portfolio look like, what does it mean?

As I talk about trend.

Trend in the last few years, let me just open up the chart.

Here is what you will see.

For example, from here, 31st Jan.

So in a year and a half, how much has the stock given a run-up?

It has become almost 3.

7 times, 370% run-up in the stock..

I don't know.

It looks very dangerous because what is it that we are looking at?

The market cap is 2,002.

The stock PE is 215.

Now, this is not the problematic part.

The problematic part is that see guys, the

trend, for example, you have seen it runs like clothing stores called as Zudio.

Now, they are in retail business.

More importantly, in what type of retail business?

Clothing retail. What are the margins?

And this is like non-luxury retail.

Because you have seen, for example, Zudio T-shirts are 200, 200.

How much margin is Zudio going to make?

Maybe 10, 15% margin.

If you're wearing Louis Vuitton or

Balenciaga, and all these T-shirts, T-shirts are different.

Maybe those companies are making 100, 100% profit margin.

But here the profit margin will not be crazy.

They are playing something something This

is volume game, and they are competing on price.

They are competing on price.

Now, if you are comparing it to something like, let's say, Apple products.

Now, Apple products, like Apple, Apple is a new product..

Now that's an entirely new space for Apple to explore.

They will have a profit margin 60, 70%,

like iPhone's profit margins are 50, 60% as fast.

So here, the profit margin is very high.

This is luxury retail.

This is communistic retail.

Now, you are giving up PE ratio of like 215 on a particular company.

So this is absolute madness.

Now, your loss chances are much higher rather than you making profits.

So if you're sitting on 40% profit on

something like trend, so this is not a recommendation.

But, logically speaking, what you should

be doing is that you should at least figure out that, you know what?.

Again, not a recommendation.

I will just quickly take you through some charts and graphs and momentum.

Certain stocks, for example, as a fine organic, it is in a momentum.

Now, why is it in a momentum?.

There is a technical pattern that is getting formed.

For example, if you're going to draw a

technical chart pattern, it will come like this.

It can be like this.

It can be like this.

Technical pattern comes like this.

And this depth is like this.

Rough, if I have to do this computation for you.

So let's take it like this.

If we pick it up and.

So you'll see that it to this line, then

the total target price comes out to be 6,500.

So yes, the market right now, if you go

back, check, nifty again, it is hitting all time high, all that stuff.

But there are certain stocks where there

is momentum coming, and it's been a good revenues, no doubt about that.

So see, if you look at the revenues, the revenues are good.

It is less compared to last year. Because why?

Because the China issue.

So this is the theme that impacted a stock like Fine Organic, TarSons.

These companies were unable to sell that much stuff.

But still the company is able to sell stuff profitably.

And it is still, if you look at its revenue, it is still...

If you look at its revenue, it is still the same.

So last year,, it was an anomaly.

So this problem, China Dumping, in 2023, it started.

So until then, the revenue was reflecting, and then it got reduced.

Now, it will keep on going down only.

So if the results of one, two quarter

results are good, then the chances are that the company is going to do well.

So how is the recent quarter results been?

So from that angle, the stock looks

okay and it is in a good momentum.

The target, according to me, I have already revealed.

So this is something that I would closely look at.

And if this is the theme that you're building, you could consider it.

Now, again, this is not a push, you can see the quarter-wise results.

So quarter-wise results, you will see an upward trending curve.

Here, there were 472.

In March 2023, it was a 700 crores business.

Then it fell, then it went a little bit down.

Now, it is No, I'm just kidding.

If you look at the PE ratio here, the

typical PE ratio for something like HDFC Bank is around 21, 22.

It's the average PE that has come.

When the PE started correcting, you can

see that the PE corrected all the way till 15.

Now, up there is PE expansion that is happening.

The stock price growth that is happening,.

Now, it is very likely that its PE is going to expand.

Now, what gives confidence for something

like HDFC Bank, again, is that if you look at its results, the profits have doubled

in the last three years, revenues have doubled in the last three years.

There's no major problem, per se.

So despite the markets doing really well,

HDFC Bank hasn't done well in accordance with the market.

So therefore, they have started to run.

So on that note, also, I think another

good bank is Cotec Bank, because I've been accessing a lot of run-up.

Now, if you again check, exactly the same thing has started to happen here.

For example,, now it has started to come back up.

So it may grow to be chances.

The PE of the stock is not that high to begin with.

So this seems good.

Now, of course, it's not guaranteed.

Of course, it can go down.

But see, folks, the bottom line is that if the PE of the stock is 19 right now, okay?

Now, at one point in time, it was.

It's not as if there's a lot of correction is left.

From that angle, again, I would say that

the stock is in a very good PE momentum, so to say.

Now, the fourth stock that I will speak about is Bandan Bank.

Now, Bandhan Bank. If you actually Google Bandan Bank, you

will realize that Bandan Bank had a lot of succession issues.

Now, what is the meaning of succession issues?

This person here, Subash Chandra Ghosh, he built Bandan Bank right from scratch.

He was the MD CEO of Bandan Bank.

Now, basically, because of his age, other work commitments, etc, he has to build a

legacy or a succession plan for Bandan Bank.

Therefore, a lot of succession issues were going on at Bandan Bank...

This is the statement that he had to give on this entire issue.

So I will try to link this interview, which was given two, three months back.

So you can hear out his entire commentary.

I watched the entire video.

I got a sense that, you know what?

Okay, he is actually genuinely building a succession plan.

It's not as if he was in the air, there

are genuine legitimate concerns because of age, etc.

That he has to create that succession plan.

Now, whenever there is a succession plan

which is created, there is always an uncertainty period..

But if you actually go and just.

One could argue that the stock price is not very much correct.

For example, this range, it's almost the same.

If you draw this line, it's not as if you know what, a lot of correction are going

on, they are totally ruined, types and all that stuff.

What about the fundamental performance of the stock?

If we take a look, all time high revenue, all time high profit.

From that angle, this seems like a good stop to hold.

Final point, I'll give you a good stop to hold.

Final point, I'll give you a good stop to hold.

Final point, I'll give you a good stop to hold..

Voltas, for example, I started talking

more about it in four or five months ago on my member community.

I started speaking more about consumer durables.

In fact, I made open video on this, consumer durables is a good bet to take.

Fundamentally strong, not crazy expensive.

For example, if you take a look at Whirlpool.

For example, here is the technical pattern.

If everything goes well.

Now, what was the issue

The issue on Whirlpool was the concept of pent-up demand.

This is something that I had covered the videos on also.

I had made the inventory-related problems that Whirlpool was facing.

But very quick explainer there that, hey, in 2020, 2021, 2022, basically what ended

up happening was that people did not buy a lot of electronics here.

Just a washing machine, AC fridge, all that.

Discretionary expense.

So these are discretionary goods..

A lot of people lost jobs, whatnot.

So they delayed their decision to purchase AC fridge TVs.

Now, in 2019, let's say, hypothetically

speaking, if Whirlpool had manufactured 100 washing machines.

Now, this inventory or most of it,.

So they had to do two things.

Number one is that they had to cut the

prices or give discounts to sell that existing inventory.

Number two, they had to halt production.

Now,.

As a result there, 2021, their profitability problem was there.

In 2022, they were figuring out market

analysis, khaja khaja, khaja feature, like washing machine and all that stuff.

This pent-up inventory took time to sell

because it was 100 washing machines, it was a lot.

This was getting reflected in 2021, 2022.

2023, consumer demand started to pick up. Why?

Because it means interest rates are high till 2023.

Now, when interest rates are high, what does that mean?

It means that EMIs are also going to be high.

And most of the washing machine, fridge, TV, AC, it's bought on what?

Not on absolute cash, it's bought on EMIs.

So consumer loans are expensive.

So EMI payments will be more, and

companies like Whirlpool, Voltas, they will all continue to get hit.

Now, this problem is getting sorted in 2024, or at least it looks like, we're

interested, cutting consumer loans, demand is coming up, all that stuff.

So therefore, the beneficiaries are consumer durable companies.

I do feel That the next 6-12 months are

going to be good for consumer durable companies.

You could consider adding it.

Now, I cannot change that for all of you.

But if the market has to even retain its Nifty levels at around 24K, then consumer

durables, again, is likely to give a little bit of run up.

Private banks are likely to give a run up.

And a lot of overvalued stocks like Trent, etc.

They are likely to correct. Now, it's your call.

How you want to manage all this situation.

Now, final note, whatever portfolio

building that you're doing, you have to do it in accordance with your risk appetite.

For example, or

Ujivan, or Bandan Bank, or The way they will function, the way they will perform,

will be very, very different from HDFC Bank's performance.

So please keep that in mind, that HDFC

Bank, if you have trust, you can invest in them.

If you have trust in them, and you're okay

with the risk, then you go and invest here.

The essence that I'm trying to communicate

is that please understand the concept of risk adjusted reward.

People want small cap returns by investing in HDFC Bank.

Now that is not possible.

So please understand that point and accordingly, redesign your portfolio.

Now, tomorrow on the member community, I'm

going to write part 2 of these momentum stocks.

So definitely in case you want more

education related to stocks and fundamental analysis on different stocks,

then you can join that educational community.

Thank you so much for watching this video and I'll see you soon.