Three Stocks - Functionally and Financially safe

While many stocks were hammered mercilessly recently, there are many investors who feel that now is the time to buy. Agreed, one should buy stocks when blood is running in the streets. But since an investor is mesmerized by the huge quantum of stocks on display, it becomes increasingly difficult to pick up good stocks from thousands and thousands of stocks out here.

Since there are so many volatile events floating around the globe, one must be very discreet in picking up stocks which have a stable background so as to ensure that your money remains stable over a given period of time.

I have identified the following three companies which are functionally and financially safe and stable companies – yes, you may want to wait for the scrip prices to go down further then please do wait. But do consider taking a call on one or all of the above three companies and hold them for about 1 to 2 years in order to generate decent returns.

1. Oil Country Tubular Limited (OCTL), is one of the leading companies in the world processing a range of Oil Country Tubular Goods required for the Oil Drilling and Exploration Industry.

2. Supreme Industries Limited founded in 1942 is an acknowledged leader of India's plastics industry handling volumes of over 100,000 tonnes of polymers annually, effectively making it the country's largest plastics processors.

3. Prism Cement Limited is one of India’s leading Building Materials Company, with a wide range of products from cement, ready-mixed concrete, tiles, bath products to kitchens. The company has three Divisions, viz. Prism Cement, H & R Johnson (India), and RMC Readymix (India). Prism Cement Limited also has a 74% stake in Raheja QBE General Insurance Company Limited, a JV with QBE Group of Australia

All of the above mentioned three companies have the following common attributes which exhibit stable financial condition and as such a safe bet during these times of mindless QE’s, gold chasers, oil shockers, scams and Chinese Whispers etc.

1.Low leverage as exhibited by a low debt equity ratio.

2. Good PAT growth over 5 consecutive financial years.

3. Decent top line growth year after year since the last five fiscals.

4. Capital efficiency – all the 3 companies have registered good Return on Capital Employed

5. Good business model that caters to a broad cross section of society and industry

The following is a brief snapshot about the numbers - give it a thought and go for it.

NAME OF COMPANY	CMP	FV	MCAP	PE	5 YEAR CARG		Debt Equity
	RS	RS	RS.CRS		Revenue	PAT
					%	%
OIL COUNTRY TUBLAR	94.20	10.00	422.00	14.18	15.49	94.03	0.05
SUPREME INDUSTRIES	144.85	10.00	1850.00	11.19	12.50	29.86	0.72
PRISM CEMENT	51.65	10.00	2612.00	14.55	34.57	32.27	0.44