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5 Must-Have Stocks In Your Portfolio

How Should You Invest in Long-Term Stocks?

Investors are sometimes urged to invest in equities for the long term to gain from compounding growth. The power of compounding is a vital idea to comprehend to fully appreciate the rewards of long-term investment. Compounding is akin to a multiplier effect because the interest generated by the original capital also earns interest. Thus the investment's value rises at an exponential rather than additive pace. The greater the rates of return, the steeper the development and wealth formation curve. To illustrate, a ₹1 Lakh investment at 10% in year one may accumulate to ₹6.72 lakhs after 20 years, yielding a fantastic return of 672% on capital.

Companies are operated with the primary goal of producing profits, and they constantly attempt to increase these earnings. However, it is their diverse methods and actions that shape their route to progress along the process. This element distinguishes good firms from bad and profitable organisations from unprofitable ones. Profitable companies create substantial profits for their owners.

A company's growth is determined not only by its size but also by its operational efficiency, which is a continuous thing. Management techniques create or break the route to success, and as investors, we must constantly investigate a company's operating model. While running a firm, it is also critical to maintain a macro view and consider numerous aspects such as govt policy, interest rates, stakeholder rights (both equity and debt owners), and so forth.

The next step is to evaluate the industry in which the firm operates. An investor should examine how the market will shape out in order to determine if there will be enough demand for the company's development in the future. The FMCG industry, for example, is a dominating topic that has witnessed spectacular expansion. India is a growing country with great economic potential, mostly due to infrastructural and human resources development, as well as urbanisation. As the government's disposable income increased, so did the percentage of processed food consumption, benefiting corporations like Britannia. If an individual had purchased Britannia for 196 per piece in 2010, he would have gotten a return of 1940% in only ten years. Compounding has this kind of power.

So, if the industry is predicted to develop, a firm with solid foundations in that area would benefit if all cards are dealt. As India continues to prosper on this theme, the company's capabilities and efficient efficiency continue to expand.

Overview Of The Best Long-Term Stocks

  • Tata Consultancy Services (TCS) - The IT sector has emerged as a long-term performer; after having been the champion of the post-pandemic period, the industry has provided a solid correction in recent months, making the income multiply reasonable for an entrance. As a result, Tata Consultancy Services (TCS) is an attractive investment right now.

TCS' superior performance metrics, complete stack portfolio (better transaction count throughout verticals), and market drivers (increase in E&U and Travel & Tourism sub-verticals) will all contribute to growth.

  • ICICI Bank - The bank has 5,418 locations and 13,626 ATMs in India. The bank has been on a transformative path since Mr. Sandeep Bakshi's arrival in October 2018. The bank's underwriting standards have greatly improved, as seen by its increasing asset quality metrics. The bank's GNPAs was 8.84% in FY18 and are presently 3.8% in FY22. In the past six years, ICICI Bank has transitioned from a business bank to a retail bank. It would result in a low-risk, high-yielding loan book that could be sustained.

 

  • Bajaj Finance - The NBFC industry generally involves lending operations such as gold loans, consumer loans, personal loans, and so on, but it differs from banks in that it does not accept deposits from individuals. These businesses would rather borrow more money from one organisation and then lend it to customers, earning the interest difference between their borrowing and lending operations. This area has seen fast expansion as the state's disposable income has risen and Indians' attitudes toward consumption have shifted.

 

  • Godrej Consumer Products Limited (GCPL) - Godrej Consumer Products Limited (GCPL) is a subsidiary of the Godrej Group, which dates back over 125 years. Its portfolio and legacy are being democratised, and this is what its approach is based on: making incredible quality items available at affordable prices. GCPL's global scope includes some of the world's biggest and fastest-growing developing markets. However, its main categories in these nations, including household insecticides, air care, and hair colour, are undeveloped, leaving space for expansion. The business views this as a major potential for value generation via the implementation of its successful category growth tactics. The objective of category leaders is to accelerate innovation-led growth and develop innovative methods to disrupt their industries.

 

  • ITC Limited - ITC is involved in a variety of consumer sectors, including cigarettes, food, and stationery. Cigarette sales account for over 43% of the income statement, and it has the largest market share in cigarettes (almost 75% in India). As the tobacco business transitions from an unregulated to an organised component, there will be market consolidation and significant market share increases for ITC. While India is the world's second-biggest tobacco user, legal cigarettes account for just 8% of total tobacco usage in India, compared to a worldwide average of 90%, suggesting enormous potential prospects in the market. Its second-largest category, FMCG, is where the corporation has been focusing its efforts to generate the most income, and it has also become its fastest-growing area. HUL, Nestle, and Britannia are among the competitors, although ITC is rapidly growing. 

Portfolio of the Best Long-Term Stocks

To gain long-term exposure to the finest equities, you will need a maximum of 53,803 from September 15th, 2023, for the selected portfolio.

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