Investors
are often advised to invest in stocks for the long term so as to reap benefits
of compounded growth. Power of compounding is an important
concept one needs to understand to really appreciate the benefits of long term
investing.
The
power of compounding works by growing your wealth exponentially. It adds the
profit earned back to the principal amount and then reinvests the entire sum to
accelerate the profit earning process.
The
advantage of long-term investing is found in the relationship between
volatility and time. Investments held for longer periods tend to exhibit lower
volatility than those held for shorter periods. Putting your money in long-term
rather than short-term investments also provides tax advantages on capital
gains.
List
of best long term stocks to buy:
1) Polycab India Ltd
Polycab is India’s leading manufacturers of
cables and wires and allied products such as PVC conduits and lugs and glands. They
have a range of cables and wires for practically everyapplication.
More recently Polycab has also launched a wide range of consumer electrical
products like Fans, Switches, Switchgear, LED lights and Luminaries, Solar
Inverters, and Pumps.
Current
market price – Rs. 2,563 Target – Rs. 4,500
2) Deepak Nitrite Ltd
Deepak Nitrite Ltd is a chemical manufacturing company.
The company segments consist of Basic Chemicals, Fine and Specialty Chemicals,
and Performance Products. It generates a majority of revenue from the Basic
Chemicals segments. Some of its product includes Sodium Nitrite; Nitro
Toluidines; Nitrosyl Sulphuric Acid; Oximes; Cumidines; Optical Brightening
Agent (OBA); Phenol and others. Its products are used in various industries
including Colorants, Petrochemicals, Agrochemicals, Rubber, Pharmaceuticals,
Paper, Textile, Detergents, Fine and Specialty Chemicals. Geographically, it
derives maximum revenue from India.
Current
market price – Rs. 2,897 Target – Rs. 3,950
3) Muthoot Finance Ltd
Muthoot Finance Ltd is a non-deposit taking, non-banking
financial company with thousands of branches in India. The company's main
business is providing personal and business loans primarily to individuals who
do not have access to formal credit. The loans are typically secured by gold
jewelry. Muthoot also offers some microfinance loans and housing loans to
customer segments and areas that are underserved by banks. Interest income
accounts for nearly all the company's revenue. Muthoot has operations in Sri
Lanka and India, with India providing almost all the company's revenue.
Current
market price – Rs. 1,548 Target – Rs. 2,750
4) Endurance Technologies Ltd
Endurance Technologies
Ltd is an automotive
component manufacturing company. The company is engaged in the manufacturing
and selling of aluminium die-casting, suspension, transmission, and braking
products. Geographically, it derives a majority of revenue from India. Some of
the products include high pressure and low pressure die castings, shock
absorbers, front fork, clutch assemblies, cork, and paper-based friction
plates, Continuous Variable Transmission (CVT), hydraulic disc brake, hydraulic
drum brake, and others.
Current
market price – Rs. 1,825 Target – Rs. 2,950
5) Tata Consumer Products Ltd
Tata
Consumer Products Ltd. is one of the leading companies of the Tata Group, with
presence in the food and beverages business in India and internationally. It is
the second largest tea company globally and has significant market presence and
leadership in many markets. In addition to South Asia (mainly India), it has
presence in various other geographies including Canada, UK, North America,
Australia, Europe, Middle East and Africa.
Current
market price – Rs. 849 Target – Rs. 1,550
Long-term
investment for stocks could be the period of more than 5/7 years (It could be
different for each investor.). Now, fundamentals and other aspects of the
company like financials, management, and efficiency play a critical role when
looking for the best Indian stocks to buy for the long term.
The
stocks that are mentioned above can be accumulated with a long-term investment
horizon that will accrue significant compounding benefits in the future.
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