It is statistically proven that long term investments in equities (stocks) can outperform any other conventional form of investments or asset classes such as real estate, gold or bank/post office deposits. However, a lot of people hesitate to invest in the stock markets due to a number of reasons including risk of losing the capital, volatility in the stock market, confusion between speculative trading vs investment, and the uncertainty around the companies that they invest in or sheer lack of knowledge to pick the right stocks.
Investing in Mutual funds (Read Systematic Investment Plan or SIP) is probably the easiest and safest route to enter the stock market rather than going for direct stock investment. However, the return on investment can be much higher if you go for direct equities as long as you pick the right stocks and companies to invest in.
An ideal stock portfolio (Read my stock portfolio that I often update) should have a mix of large cap and midcap stocks across several sectors/industries to minimize your risks. However, if you are looking at a faster growth rate you can even think of a Portfolio that’s heavier on the Midcap side if not an All-Midcap Portfolio. Given below, is a list of 20 handpicked midcap stocks that I believe should offer significant wealth creation (at least four to five times, if not more) for investors in the next ten years.
My List of 20 Midcap Stocks in India
Most of the Midcap stocks in this list are those with the proven record of high return on investment (Based on the ROE, ROCE parameters, sales/profits growth numbers etc) over a period of time. I have also included a couple rather new players which I think will excel in their respective businesses and hence offer higher returns to investors. Further, these companies are run by excellent management and promoters too and hence the business health and longevity is not under threat.
Here’s my winner list:
1. Amara Raja Batteries
2. Apollo Hospitals Enterprises
3. Atul Auto Ltd
4. Aurobindo Pharma
5. Avanti Feeds
6. Bharat Forge Ltd
7. Britannia Industries
8. Cera Sanitaryware
9. Colgate Palmolive Ltd
10. Dewan Housing Finance Ltd
11. eClerx Services
12. IndusInd Bank
13. Kaveri Seed Company
14. Kitex Garments (Previously suggested)
15. Mayur Uniquoters
16. Motherson Sumi Ltd
17. Pidilite Industries
18. Torrent Pharmaceuticals
19. UPL Ltd
20. Zensar Technologies Ltd
(Some notable omissions include Page Industries, Eicher Motors etc which have run up quite a bit)
Investment Methodology
Since the markets have run up a lot, putting all your money as lump sum investment can be very risky at the moment. Hence the following is the methodology that I suggest.
- Make a shortlist of 12-15 of the above midcaps for your investment. Give more weightage to sectors like Pharma, Banking and Auto ancillaries
- Systematically buy these stocks either by putting a fixed amount per month into buying the shortlisted stocks or by adding these stocks at every market correction
- Track your investment on a periodic basis for any change in fundamentals of the selected companies. You don’t need to track them on a daily basis as long as your choices are good and have a long term plan with them
- Periodically (once a year may be) validate and check the sector-wise weightage of your holdings and readjust if required
- Watch them grow! And do not let the market fluctuations affect your investment decision UNLESS the fundamentals of your invested companies change.
Disclaimer: I am not a qualified finance adviser or portfolio manager. Please consult the experts before taking any investment decision in the equity market. You may have to do further research on these stocks on financial portals, websites of these companies as well as mandatory filings by them before taking any positions. As a disclosure, I have investments in many of the stocks mentioned above at the time of writing of this post.
Related Posts
10 Multibagger Midcap Stocks in India
10 Small Cap Stocks with Growth Potential
Good luck with your investments!
i am thinking of buying following stocks for atleast five years each month.
it sector- infosys, tata elxsi
pharma sector- sun pharma, aurobindo, shilpa, suven, granules
auto – force motors, tata motors
auto ancilliary- wabco india, amara raja, motherson sumi, zf steering gears
textile- kitex, indocount
financials- DHFL, icici bank
miscellaneous -va tech wabag
capital goods- asian paints
fmcg- godrej consumer, ITC
i know it would be time consuming to elaborate on each stock but would be very helpful for me.. am i in right direction of making portfolio or should i make some changes..your view would be valuable..kindly help
Okay, let me try to analyze with my limited knowledge (don’t consider it as the final recommendation as I am not qualified to do so)
Most of your picks are excellent long term portfolio stocks. A couple of observations: ICICI Bank, Tata Motors, ITC etc are great bottom fishing opportunities now and not necessarily foolproof long term bets. ITC used to be one, although it may not offer the same growth going forward, in my opinion. In the FMCG space, your other picks look very good. Also, consider something like Emami at corrections. In the banking space, consider HDFC and IndusInd for long term. In my opinion, Maruti is a must pick in the auto space so is Lupin in pharma. In IT, Tata Elxi is again a stock to pick in deep down market and sell in the bull market, for me. Others could disagree 🙂 Infosys is good. Consider midcap picks like Persistent or Zensar. I don’t track Wabco, ZF, Granules, Suven, Shilpa etc.
But your thinking seems to be in good direction. Your portfolio is likely to see accelerated growth with higher allocation to Pharma, Auto Ancillaries, Banking/Finance with IT/FMCG providing a good stability and rupee trade advantage.
Just curious why you think ITC may not be safe long term bet or may not be able to grow at good consistent rate over longer term 15 to 20 years.
Can you please suggest few one in current market?
Also please advice on Force motors, Shree Hari Chemicals, Welspun Syntex, Cipla, CCL products and TCS?
From your list, I would buy into TCS, Cipla etc for the long term portfolio. Welspun India, Zensar Technologies, Mayur Uniquoters, Kaveri Seed etc look attractively priced to me and I am tracking them with the intention of buying. Disclosure: Already bought Mayur and Kaveri.
Sir,
Are there any listed IT companies working on SMAC.
Regards
No idea. I think most social and analytics companies are startups that aren’t listed.
I want to invest in multibaggers for a period of 1 or 2 years. Can you suggest a few nice stocks. I would like moderate risk stocks. Dr.Shantha Prabhu
Really top class analysis by you. I want to buy some of blue chip and some of growing stock with10 year view
Hi Ajith,
Thank you for helping people with your unbiased suggestions. Your previous suggestions were spot on.
I want to invest for medium term (2-3 years) and long term (6-10 years). Could you please give the 4-5 stocks in each category please with low-moderate risk? I want to invest in lump-sum not SIP, is it right time?
The following stocks look good to me at their current prices. Consider them as what I am buying than recommendation. If you are not comfortable with SIP, you should buy them at least twice (as nobody should miss out any deep fall which keeps happening every few years). All of them in fact are good long term portfolio stocks though the one listed in Medium term category are reasonably priced as of now, in my opinion.
Medium Term:
============
ICICI Bank
Lupin Ltd
Tata Motors DVR
Maruti Suzuki
HCL Technologies
Long Term:
==========
UPL Ltd
Pidilite
Asian Paints
HDFC Ltd
Bajaj Finance
Hi,
I am start learning and investing in Equity for long term minimum of 10 years.
I am able to invest 1000/month in equity kindly suggest some good stocks.
Almost all of the stocks mentioned above are good for long term too. But you may want to add some large caps too to the above list to balance your portfolio. The following stocks overall look good to me to SIP on a monthly basis (Do your own research too before taking a call)
Amara Raja Batteries
Asian Paints
Aurobindo Pharma
HDFC
IndusInd Bank
Lupin
Maruti Suzuki
Pidilite Industries
Hi,
I have the below stocks in my portfolio or want to invest and hold for (3-10 years) – monthly SIP basis.
Pharma – Cipla
NBFC – Can Fin Home, LIC Housing
Banks – Axis, ICICI, SBI & IDFC (given that they have just started)
Real Estate, Infra, Road etc – DLF, JP Associates, Sunteck Reality, IVRCL, Ashoka Buildcon
Diversified – Mercator
Energy & Power – Suzlon, JP Power
Metals – Vedanta, Hindustan Copper
Cements – India Cement
Software – Intellect Design Arena, Tanla solutions
Airline – Spicejet
please let me know your views on the above stocks – I understand that some of the stocks are really not worthy(JP, IVRCL) but I’m stuck with them at a higher price!
thanks
Sorry, I can’t go through the whole list. However, here are some of MY preferences in each sector.
Pharma: Lupin, Aurobindo
NBFC: Bajaj Finance
Banks: Agree with your list (Also, Yes Bank would be good at dips)
Real estate: I don’t like many companies here – may be except Oberoi Realty. I hold NCC as a real estate + infra player
Energy: No idea
Metals: I avoid. Hindustan Zinc looks good
Cement: Ultratech. Not much idea about small players
Software: Check out Zensar
Airline: Indigo
Other: Asian Paints, Pidilite,…
Just my thinking. I hold some of the stocks mentioned above. Please do your own research.
I also investment to 10-20 year horizon to my retirement .please advise me 10 stock they do best in future. my preference lupin,ICICI bank,sunpharma,HCl technology, tata motor,Asian paint etc.
All your picks good. You can also add Aurobindo Pharma, Bajaj Finance, Bharat Forge, HDFC, Maruti, Pidilite, Yes Bank, Zee Entertainment etc
hello mr ajith…
i am 34 years age and have started up wit sip in 3 mutual funds… for a time frame of 10-15 years … i also want to start up sip in stocks like buy every month a few which ever has fallen down… so can u suggest me 10 stocks which r a mix of multibagger potential ….would be thankful to u god bless
Sorry, I have no idea about new multibaggers! However, most of the stocks listed above will continue to be be good wealth creators in my opinion. In addition, some large caps like Asian Paints, Bajaj Finance, Lupin, Maruti etc could be part of the long term portfolio.
Dear Ajith sir, u recommended 20 stocks at mid 2015, shall I invest those stock now also please help me. M thinking to invest in sip mode for 5 to 10 years please help me sir
Nithin, All of them are still good for long term in SIP investment mode. Kaveri Seeds is one of the stocks where I am waiting for some clarity myself as well. Be sure to SIP some large caps as well (Refer to the comments above).
S.No. Sector Stocks
1 Banking & NBFC 1. Federal Bank
2. Karur Vysa Bank
3. South Indian Bank
4. L&T Finance
5. IDFC Bank
6. Manappuram Finance
2 Pharma 7. Sun Pharma
8. Aurobindo:
9. Lupin:
3 Paints 10. Berger Paints
11. Asian Paints
12. Rallis India
4 Housing Finance 13. LIC Housing
14. DHFL
5 Automobile 15. M&M
16. TVS Motors:
17. Tata Motors :
6 Tyre 18. JK Tyre –
19. Apollo Tyre –
7 FMCG 20. ITC 21. TGB
8 Engg. & Infra 22. NBCC
23. Titagarh Wagons
9 Petrochemicals 24. Reliance
10 Food Processing 25. LT Foods
26. Prabhat Dairy
11 Power 27. Suzlon Energy
12 Metals & Mining 28. Vedanta
13 Steel 29. Jindal Steel & Power
Kindly advise; if my stock selection for long term (10 years or more) or need some changes.
regards,
Ashish Gupta