Friday, July 31, 2009

A nightmare for a value investor?

Here is the list of Sensex non-commodity stocks with their P/E ratios. Ben Graham would not touch a company with P/E of more than 18 and with P/E of last 7 years' EPS of more than 25. The criteria for commodity is different. Can you find even one with P/E less than 18?















CompanyTTM P/EP/E of 7 year EPS
BHEL3462
Hero Honda2237
HUL3030
HDFC3050
ITC2740
Infosys1940
L&T2255
Maruti3038
NTPC2130
Tata Power2338
TCS1933
Wipro1832


This really is a nightmare for a value investor. Stocks are overvalued doesn't mean they would come down soon. The famous British economist John Maynard Keynes has said

"Markets can remain irrational longer than you can remain solvent".

The only thing a value investor can do is to sell some of his holdings. Mr. Market is very enthusiastic right now and nobody can fight his enthusiasm.
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1 comment:

ss said...

Hi Chinmay,the auto and IT stocks are on fire closely followed by FMCG and healthcare. It is true that many auto stocks have run up too far e.g, Hero Honda but we can't help it! As they say -the trend is your friend until it bends!

Cheers!

ss

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