Top 5 Best stocks to invest for bulk buy and SIP 2024

Hi everyone. Welcome to today’s post.  In today’s post, I’m going to discuss three things.

that which stocks you can SIP. Sip means that, for example,  if you’re getting your salary and are looking to put that money into the market, then regularly which stocks you could consider buying. So this is one.

that which stocks you could bulk buy. Which stocks would these be and why?

which stocks you should avoid. This third part is not a big part.

So I’m going to write about all these three parts in today’s post.  For people who are new to my website, my name is Khushal Oza. I learned a lot about finance.

Now,  approximately for the last 4 years, I’ve been managing a fairly decent-sized portfolio. Now, I understand investing through different, different lenses. I study the macroeconomics.  So I’m a macro investor.  Understand the Nifty levels because Nifty is overvalued, undervalued, this, that stuff. See,

guys Nifty is here and it has been consolidating in this range since when? For the last two years, the Nifty PE ratio has been almost in this same zone. For the last two years, even now, Nifty has been consolidating. It is neither overvalued, nor undervalued.

According to me, this is fairly valued right now. Now, of course, going forward in the future, panic creates. For example, right now, a lot of talk is happening that Mr. Warren Buffett Is sitting on a massive amount of cash. He has liquidated some of his position on Apple stock.

So crash. No. So Mr. Warren Buffett liquidated his positions even after 2020. And then he was sitting on cash for approximately, one and a half years. He missed a major market rally. I’m not saying that he’s a bad investor or something. Please don’t start all that fight. I’m just helping you understand the entire context. And every day, some big-ticket investor, for example, Mr. Michael Burry, constantly says negative things about the market. See,  guys, you have to be reasonable.

The point and a more practical perspective is that if you are a big-ticket investor, let’s say that if you have 100 crores in the market, even when you are trying to convert more into cash positions, you will not cut more than 20% of your positions. Now,  typically speaking. Now, on top of that, if every year this big investor is making  10 crores, they will just put it under the mattress and go to sleep. No. Inflation, they still keep on investing sensibly.

So which brings us to point number two. But let me close point number one. That’s seen,

right now, the market is neither undervalued nor overvalued. You don’t need to be hyper-scared. You don’t need to be overjoyed. That is the price component. But check it in the context of

earnings. If earnings are going up and therefore the price is going up, there is no issue.

But if the price is going up and the earnings are going down in the market, that’s a problem.

So knowing these fundamental points is what is going to give you confidence. I hope that this

first point is clear.

Now let’s move on to the second key point.

That’s okay, what are some SIP-worthy stocks? And can you give some commentary? Yes. So  I’ll take a quick here. So let’s start with a simple story. And let’s talk about HDFC Bank. See, I’m not SIP-ing in HDFC Bank first and foremost,  and I’ll quickly explain to you the logic behind it. See, the best time to SIP something like HDFC Bank was somewhere here when it was in a growth phase. They got crushed very badly, all that stuff. And after that, there was a massive recovery. So for example, if you would have purchased or did SIP on something like HDFC Bank, it was a smaller bank to begin with. And then if you would have continued to hold it in the entire bull run, it almost like, how much money did it make for you? It almost ten-egged your money. Buy the absolute bottom and sell it at the absolute top.  The idea is that you keep on putting money on a systematic basis. And instead of 12Xing  your wealth, this would probably be 4X, 5X your wealth, which is very good. Now, what you need to understand here is very simple.

That’s see,  back in 2008, and 2009, HDFC had a smaller market cap. But the market cap would have been very low.

It would have been a fraction of what it is right now. So this bank could be almost 2X, 4X in size. So this was possible back then. Number two, there was some good stuff there. And basically, a lot of good things were happening in the banking industry, especially private banks in India. And the growth rate of this industry was fairly high. The banking growth rate has been very high in India in the last one and a half. This was overall a growth stock. So the SIP is usually done on a growth asset. Now tell me that, hey,  how much will HDFC Bank grow in market cap?

I’m not saying that it will not grow. It will grow. It might double in size, but that might happen due to PE expansion, not necessarily due to earnings doubling and all

that stuff. A cheap performance a bank, you can expect, let’s say, a 15% CAGR growth on the bank, but it’s not as if it’s a very small bank and it will keep on doubling every four or five years, all that stuff. Therefore, it is not a SIP stock as per my understanding. Now, it is a bulk buy stock.

So there is likely to be a P/e is what? Pe is around maybe 16, or 17. So there is likely to be a PE, and there is room for improvement in price. So earnings, let’s say stays constant. The PE ratio can still go from 17 to 24 with zero growth in earnings.  So therefore it is in a bulk buying zone. Why?

Because as of the money, the banking, private banking stocks are going to remain at 17 PE,

this, that stuff. Why? It has been the lowest  PE since… Since when? Since even here.

It is at less than that level. The same is the case in Kotak Bank. The same is the case in a bunch of other private-sector banks. So these are at bulk buying levels, so to speak. Now,  what becomes a good SIP-worthy stock? So on the flip side, if we consider something like, let’s say IDFC First Bank. I have repeated this because I want you guys to make money. See, here the market cap is What was HDFC’s market cap? It was 11 lakh crore. Now, there is almost a 20x or 20 times difference between IDFC’s first bank’s market cap and HDFC  bank’s market cap. So if you have to get an SIP,  then where do you think growth will improve?

For example, a good phase in banking, then do you think or do you not think that IDFC’s first

bank will double in literally two years? Then HDFC Bank doubled in No, guys. Hdfc Bank is a very good bank. I  have bought it in bulk. I am keeping it,  and it will grow in value. Why? Again, I keep on showing it, so I’ll be very quick here. Hdfc Bank.

For example, in the last four or five years, has it been able to double its earnings and net profits?

Yes, it has been. Technically, in the last four years, for example, in 2019,

what was the stock price? You have to look.  2019, the stock price was roughly 1,300.

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Now what is the stock price? It is 1,400 something,  despite revenues doubling, despite profits doubling. Under no circumstances is HDFC a bad bank, but it is not an SIP type of a thing because this means for a fairly long period,  it might just consolidate again. So, therefore,  you need to buy these types of good stocks. For example, HDFC Bank, Kotek, when either technical patterns are getting formed or when you see a bulk buying opportunity. Let me give you another example of a bulk buying opportunity for Hindustan Unilever. So I’m. I’ll just quickly cover it and explain to you the funder. Therefore,  I’m repeating the examples. Now see, here again,

if you take a look at the P/e ratio, it is almost falling to its average P/E. You’re not buying this stock at crazy valuations. The problem, when you are buying HDFC Bank or Access Bank or good companies like Hindustan Unilever,  even if you go and read whatever,  annual report this, you will not be able to uncover any scams and all that.

These are cleanly run firms. They are in the public light. The only issue that happens in

these types of companies is that valuation goes up very high. If you are bulk buying these types of

stocks at good levels, you will make good money.  That is the bottom line. Now, I’m not saying. I don’t know. It might take like six months. It might take one year for stock price recovery,  whatever it is. But right now, if we go back to the FMCG space, the volume is coming up.

I had written an entire article on HUL, go and read it.  So volume growth is happening. Profit growth when

it comes to HUL stocks because they can price their products well. In fact, during COVID-19, or just after COVID-19, they were able to increase their product prices by 10 to 20% in a very natural response. Then comes a very natural response. See, it depends from a stock-to-stock perspective.  But let me still give you a very quick idea. So let me pick the example of Kotak Bank. Again,  this is at a bulk buy level, according to me.

I have already bulk-bought it. Now it’s your call. What do you want to do with it? This is not a recommendation.

All these are bulk buying opportunities as per my understanding. Now a natural question will come,  can you write it on a stamp paper and tell me that today if I invest in HDFC Bank or HUL and all these stocks, I will make money? No, I cannot write. Why? Because you need to have logic. You need to have confidence to invest.

So please do not make the mistake of thinking that HUL cannot double in price, HDFC Bank cannot double in price quickly. It can be because of those gains, they are deliberately held. They are not allowed to run for a little bit. So that’s typically how it happens. Because if it were that easy,  it doesn’t work that way. Then everyone would be rich. So you need to have an understanding of technicals. You need to have an understanding of business. You need to have faith and confidence,  and you need to know the stuff that you are betting on.

Now let’s continue with the I talked of SIP-worthy stocks.

So IDFC  first, which is a very good SIP-worthy stock. Number two, what you can do is,  let’s see, you might now think about. Because then what will happen is that they might not double. This is what you told us. No, you need to understand the context. So I’m going to give you a Max health care case.

And this is a stock that I’d purchased roughly 6-8 months back.  So this has made very good money. And what was happening was that in the healthcare industry,  a lot of money was coming in. For example,  last year, insurance became expensive.  I used to say it out very loudly. Healthcare inflation itself is 12, 14%. Now, what is the meaning of healthcare inflation being 12, 14%? It means that if the general inflation in the economy, that is 6, 7%, healthcare products, that inflation is double. Now, earlier, you used to pay 1,000, because it is growing at 12%, in five years, the cost of health care will double, and it will keep on doubling if inflation keeps going up at roughly 12%. So that is how fast the inflation is growing. Now, the problem that ends up happening is that,  if you look at the market cap of Max Health, now,

this is like 81,000 crore company. This is not a small-cap, mid-cap type of company.

This is a reasonably sized player in the market.  Now, if you look at this, you will know that it doubling its revenues, and profits. The short answer is yes, in fact, in the last three years, it has been almost four times. It has increased its revenues. Almost how many times? Almost 20 times. It has increased its profits. Now, a natural question is, is this thing cyclical?

Maybe COVID over it, people started spending a lot more money on health care, and now they will not spend. No, so this is not like the vaccine business.  I mean, Max health care is into hospitals. For example, So you’ll say that it is engaged in providing health care services through primary care clinics, and multispeciality hospitals. So your hospital business. Now this is highly sustainable.

Now you need to ask yourself, It has almost increased by four times in the last three years.

Almost every year, doubles. Why is this happening?  Now think about it Up until very recently,  especially like pre-COVID, there was a lot of prevalence of very small hospitals. These are compounders used to become doctors.  If you go to tier 2, tier 3 cities, villages, and compounders act like doctors there.

So this was unorganized health care, one could say. Now, much of that health care is getting converted into organized space.

This is one. The second key point is a lot of migration to urban localities has happened. For example,  just say, the big chain of hospitals is not there in Goa. They’re a handful. But in Delhi,  there is almost every major hospital is there. From there, they will make a lot of money. So as cities get more urbanized, pollution problems,  lots of problems, by default, people have no other choice but to avail treatments at these

types of hospitals only. So this trend is likely to stay. The only reason why this trend will fall off

is if the de-urbanization problem happens in India if satellite city starts to come up, then expansion

and all that stuff, and their per-hospital profit will come down. So expanding that franchise,

so to say, it is already stable for something like  Max, Apollo, all these stuff, and they are going

to be consistent compounders from this point.  It’s unlikely that they won’t have a business

of 10,000 crores by the next 2, or 3 years.  So this stock is also likely to double.

So you could put money in an  SIP mode.

So one stock, which is Jio finance.

I am also an investor, by the way. I had made very good money on JIO finance already. Again,

Now, JIO finance should be bulk buy, which should be SIP. See, I’m not doing either.  Now, in my case, the situation is that I have already put a big chunk of money in JIO  finance to begin with. I have a relative margin of safety. Here are three, or four key points that you should know about Jio Finance. Now,  one is the market cap point. See, the market cap of the company is already 2.25 Lakh crore.  That is how big JIO finance has already become.  Right now, their revenue from operations is close to nothing. Why? Because their businesses are not established yet. Most of the money that they are making is from their cash flow from investing and cash flow from financing.

Now, what does this mean? All that stuff, you Basically, going forward, what is going to happen is that the onus of proving this market cap on Jio finance has to be borne by OpEx income. So operational income, now, if you break apart the model,  what you will see is, and this was an interesting point here. So for example, here you will see,

This section is very important. The Jio FIn is a holding company of what? Of insurance, broking, JIO payments bank, JIO payment solution, reliance industry,  etc. And your broking business may be, AMC  business may be, etc. Now, AMC business, business, business, business, business. The first phase of the growth of JIO finance was a sentimental push because everyone was almost certain of JIO  finance regulation to handle. And it has. It’s 2.25 Lakh crore. It’s almost three times that of max health care. Now this is digestible,

one could say. As per your understanding,  everyone would have their perspective.

My simple point is that if JIO Finance is 50% market cap of HDFC Bank,

I will not worry because HDFC Bank to get to that point of market cap.

JIO Finance has a lot of connections. It already has a lot of regulatory clearances,  and brand building, whatnot. So 50% of the market cap is not an issue.

Now, the reason is what? Now, the reason is that everyone kept on saying, EV growth,  Tata Motors, up has gone. Now, almost 70%  of the money that Tata Motors makes is from its Jaguar Landrover business.  It is not necessarily an EV play. I think they see EV cars, therefore, Tata Motors will as a price. Now this is dangerous because of that. So this is point one. But the sentiment says I see EV cars, therefore, Tata Motors will face a lot of challenges. For example, you are a lot confused, so I’m just going to keep it at a very high level. I might make a separate video on this topic, but I will just state two, or three points very, very bluntly, and feel free to disagree. No problem there. But please keep the discussion reasonable and don’t confuse people who are just reading it and they are newcomers, all that. So number one problem is the four-wheeler infrastructure creation issues. For example, in China, where EV charging points are going to be, the infrastructure layout, in the US, is driven by data. You have to plant those  EV stations and EV charging stations,

all that stuff. Now, India announced. For example,  you can drive like 350 km or something like this on a full tank. So long distance. So petrol pump, you have to make it an EV charging station. They were not built on any study per se.

They crop up because when it comes to conventional automobiles, the range is fairly wrong. For example, if you have petrol, then you can. If you say, we will convert it to EV charging points, all that stuff, might not be suitable.  That’s point one. Point two, you might say,  maybe we’ll bring new infrastructure in. Do you know the cost of land on a highway in India? It’s one of the most expensive in the world. Why?  Because India is very densely populated, It’s not that easy. So all these challenges are there in terms of infrastructure creation. It has nothing to do with the fact that we cannot create good EV infrastructure.  We can, but there are legitimate problems in  India because of our densely populated landmass.

America is almost three, or four times India’s landmass. China is very big in terms of land area, and all that stuff. So building that infrastructure  is easier there compared to building that in

India. So this is a major problem. The number two point is that in the EV segment,  It is a net loser industry. For example, it’s not as if 10 million vehicles are sold in the world.

These are conventional. Now 50 million EV vehicles will be sold in the world because it’s EV. No, the market size will remain the same only, whether you drive conventional automobiles or EV automobiles.  But the problem is that in this. You don’t know about the market prospects in the future, who is going to come in, etc. Until now, Tesla is going to be the number one player.

Even Elon Musk himself is saying, you know what? The Chinese are what I’m going to be

scared of, because they will be able to manage the competition, and the cost of production is lower,  Etc. So a lot of competition is coming into this mix. So please be a little bit cautious. I’m not saying not to buy it or something like this or sell it or something like this. This is your call. All I’m simply telling you is that this is a slightly overheated stock as per my understanding. The upside is very less compared to the downside.

So that’s what I would close the conversation at.  I hope that you enjoyed this post.

1 HDFC BANK

2 KOTAK BANK

3 IDFC First Bank Limited

4 Jio Financial Services Ltd

5 Max Healthcare Institute Ltd