These Indian Stocks are Spicy Hot and Ready to Serve
Phillip is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Several markets throughout the world are positioned to take off in the coming years, and many have already started their upward swing. Brazil, Russia, India and China (BRIC) are considered to be the highest economic growth regions in the world.
India stands out to me as one of the surest bets moving forward. The country's massive population of nearly 1.3 billion consists of a growing middle class that will be able to stimulate the nation's growing economy. A rising standard of living along with greater acceptance of Western values signals a market ripe for mass consumption.
Wipro ADR (NYSE: WIT) focuses its business on information technology, which will be in greater demand in the years ahead in India as the spending power of the general population improves. Wipro's income has increased by approximately 10% in each of the last four years, which is impressive growth, considering the company is already worth over $23 billion.
Wipro specializes in research and development services, as well as software solutions. While the company is based in India, it is well tuned to the global market and does business worldwide. The company is positioned to be a leader in information technology. As the business environment in India improves and more workers are hired, technological advancements in the office will be needed. Talk about growth potential.
Tata Motors (NYSE: TTM) is a well-diversified automobile company. The firm specializes in supply chain activities, construction equipment manufacturing, automotive solutions and factory automation solutions, for example. The company has more than doubled total revenue since 2009, but the stock price is far off its 2010 high of around $37. Tata is currently priced in the mid-$20 range.
The company sold more than 1.2 million vehicles at the end of fiscal 2012. It's valued at approximately $13.7 billion, and represents a relatively safe way to invest in the Indian market. Tata Motors is well-priced for a possible breakout. The trailing price-to-earning (P/E) multiple is currently lower than 7. That represents one of the least expensive valuations in India's automobile sector.
Sterlite Industries (NYSE: SSLT), which is valued at about $5.4 billion, is a mining and metals company that focuses on phosphoric acid and copper. The copper portion of operations consists of manufacturing continuous cast copper rod, copper cathode, dore and anode slime. The firm also has an aluminum foils portion of operations.
The profit margin is probably the most attractive feature of this company, with net income at about 19% last year. The company is poised for huge growth, and with the majority of analysts considering this stock a "hold," the share price is still at its recession level in the $6 range. Shares were worth over $25 pre-recession, yet revenue has nearly doubled since 2009.
An interesting component of this diversified company is its wind-power plants. Investing in Sterlite wouldn't only mean placing your money in one of the fastest-growing economies in the world. You would also invest in an alternative energy source, which also has huge growth potential. A stock as diversified as Sterlite allows investors to place a financial interest in various components of the Indian economy.
While the sizzling economic activity in India is enough to get investors excited, the political stability and various reforms the government is undertaking show even more promise. The foreign-investment regime is transparent and liberal, the banking system is well diversified and the market is vibrantly capitalist.
The stocks mentioned in this post are all large-cap, but there is huge potential in small-cap Indian stocks, though I am much more cautious about global small caps. India is one of the world's most active area for entrepreneurs, so the free-market principles are alive and well. India has received major attention over the last several years, and stock prices soared in 2010. However, the nation has much more room for growth, and now could be your time to get in on the action.
Phillip Woolgar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!