Understanding Momentum Stocks
Introduction
- Speaker: Akshat Shrivastav
- Background: 14 years in finance/consulting, runs a hedge fund
- Purpose: To explain momentum in stocks and whether to add them to your portfolio
Quick Market View
- Current market trend:
- Followed by channel (resistance line turns into support line)
- Major downside capped due to new resistance
- Market may fall 1.3% unless major news affects it
- Possible triggers:
- Interest rate cuts
- Political changes (e.g., Donald Trump returning to power)
- Investment sentiment:
- Reinvestment opportunities
- Assess existing portfolio before making decisions
Analyzing Specific Stocks
- Example 1: Whirlpool
- 12% run-up in a single day
- Stock is in momentum
- Not a push to buy, just an example
- Logical Investment Decisions: Trend Analysis
- 370% run-up in a year and a half
- Market cap: 2002
- Stock PE: 215
- Example: Zudio (clothing retail)
- Margins are lower for non-luxury retail
- Apple Comparison
- Apple products have higher profit margins (60-70%)
Technical Patterns and Their Importance
- Fine Organic
- Consistent momentum
- Revenue impact due to China's market
- Company's profitability
- HDFC Bank
- Profits and revenues doubled in the last three years
- PE ratio: average 21-22, now correcting
Stocks in Momentum
- Kotec Bank
- Similar upward trend
- PE: 19, potential for PE expansion
- Bandhan Bank
- Succession issues discussed
- Fundamentally strong: all-time high revenue and profit
Consumer Durables Sector
- Voltas and Whirlpool
- Consumer demand likely to rise
- 2020-2022 inventory issues
- Positive outlook for 2024 due to potential interest rate cuts
Conclusion
- Risk Appetite:
- Portfolio should align with your risk
- Diversify investments between high-risk and stable stocks
- Understand risk-reward relation
- Upcoming Content:
- Part 2 of momentum stocks analysis in the member community
Educational community for more resources on fundamental analysis and investing.