Tuesday, March 23, 2021

WHAT TO BUY FOR 50-60% RETURN?

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For those who want to bet on a little higher risk, cyclicals would probably generate faster returns. However, I think the consumption space and FMCG in particular, could generate a steady return and that is why some of the long-term investors like them.
There are a few companies which remain in the merit list for us. One among them is a company called Infibeam. It is a company which is in the fin tech space and it is emerging stronger. They are facing a certain amount of challenges as far as the market perception is concerned, but in my view, given the track record that they have demonstrated and executed, I would think that this company has a relatively strong proposition to provide a multiplier set of returns. In the Indian market, analysts and investors probably understand a little less about the fin tech space. With some degree of understanding, these companies could command relatively better valuations. Along with that, there are opportunities in the mid tier IT companies which are basically aligning themselves largely with the cloud computing and digital space. Here, one could see a CAGR of around 25-30% over the next 4-5 years. There are select companies in the portfolio where we feel that opportunity is there and risk is worth taken.
On one hand, there is content and on the other hand, there is distribution. If you can plug your content to the distribution well, that is where the larger growth is going to be. The growth in the market cap of some of the companies in recent times can be linked to the OTT platforms which have generated a significant amount of wealth for these companies who are willing to expand globally. In India, most of the companies have got strong content -- be it the Zee group & Network 18 Group they are basically registering higher amounts of returns on the OTT side. That is an area where we think one can think of creating wealth.

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