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Stocks To Buy Now : REC, A Dividend King Company



Hello Guys, welcome to Amazing Adviser. Today I've come with a stock which is in its bad phase and you can consider it to buy for creating wealth. I must mention that this post is totally based on my analysis. Please consult your adviser before investing.



So today's share is REC or Rural Electrification Corporation Limited.


My first reason to choose this company - It is a Navratna Company and it has a support or back up of government. I know most of the people bet on private sector company these days but sometimes it's good to think from other point of view. REC operates in Power Sector and we all know India is a Power Hungry Company. India has more than 130 crore population and there are still many villages in which power has not reached yet.


Most Importantly power sector is a beaten down sector from last two decades. So the best of this sector is yet to come and I'm sure it will come in next decade. With advancement in technology we all need power, electricity and fuel. REC is a dominating company in this field. It basically gives loan to company for setting up infrastructure for Power generation.


This is it's fundamental analysis. Now let's come to technical analysis. I want to show you it's weekly chart.




You can clearly see that this stock is trading in a range from ₹75-₹200 from last 10 years and now it is trading at ₹120. From the chart it is very clear that this stock has a strong support near ₹75. Recently it has touched ₹100 and from there it has rallied up to ₹120. I think this is the best time to include this stock in your portfolio for long term wealth creation. It's my experience that in each budget there is some announcement for power sector and power sector rally before budget. So we can expect price appreciation in short term also.


Further it's EPS is around ₹23.53. If we discount it with 10% for perpetuity then also its value comes around ₹235. So clearly it's an undervalued stock.


Apart from that the most convincing reason to buy this stock is its dividend yield. In FY 2017-18 it has distributed ₹9.15 per share dividend which comes around 7.6% in current price. Bank FD's rate are decreasing. SBI is giving 6.6% interest in FD. So you can invest in this stock and think it as FD. It will give you return like FD interest each year. Adding to that your dividend will be tax free whereas interest in FD are taxable. So why not invest in this stock or I can say multibagger.


That's all for today. Keep visiting this blog for learning and earning.


Thank You

Happy Investing


(Disclosure- I have this stock in my portfolio)

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