Zebu blog

Tag: Value Stocks

  • Should You Invest During A Recession?

    After Russia invaded Ukraine, the stock markets in India went down a lot. India imports more than 80% of the energy it needs, and prices for crude oil are going through the roof around the world. Also, international institutional investors have been taking their funds out of the Indian stock markets slowly since October 2021. As investors from all over the world rush to the safety of US government bonds, the Indian stock markets may fall even more. Should you buy stocks during a recession?

    Why do investors think it’s a good time to buy stocks when the economy is down?

    During a recession, the value of stocks tends to go down. When the stock market goes down, you may be able to buy shares of strong companies for less money. It is a business that is financially stable and has good corporate governance.

    If you want to invest in stocks that will give you good returns over a long period of time, you should choose companies with an economic moat. These businesses have an edge over their competitors because they have things like strong brands or good distribution networks.

    During a recession, you might want to invest in the stock market, which is known for long-term growth. Also, a stock market drop happens before a recession, so the economy goes through a stock market crash before it goes through a recession.

    Before buying stocks, many people wait until the stock market is at its lowest point. Analysts of the stock market warn against using this strategy because it’s hard to know when the stock market will hit bottom. To invest in a stock market that is going down, you need to know how to do it right.

    How to invest your money when the stock market goes down

    If you’re new to the stock market, you might want to invest in a diversified equity mutual fund instead of buying stock in a single company. Investing in stocks from different industries and businesses gives you the chance to spread your risk. For example, weaknesses in one area can be made up for by strengths in another.

    With a systematic investment plan, or SIP, you can put your money into equity-diversified mutual funds. It is a way to invest a fixed amount of money in a mutual fund scheme on a regular basis. When stock markets go down, you will buy more equity fund units, and when markets go up, you will buy fewer units. It helps make the price of buying units of equity funds more stable over time.

    If you know a lot about the stock market and are willing to take on more risk, you can invest directly in stocks. It is helpful to do research and choose cyclical companies with strong fundamentals that could do well when stock markets recover. For example, changes in the economy’s big picture have an effect on cyclical stocks in industries like financial services, travel, and hospitality.

    During a bad market, you might want to invest in companies that are safe. Some examples of defensive stocks are those from the fast-moving consumer goods, pharmaceutical, and utility industries. These are the stocks of companies whose products and services are still in high demand even when the economy isn’t doing well.

    During a recession, you shouldn’t buy stocks from companies that have a lot of debt on their balance sheets. When the economy is bad, it can be hard for these businesses to pay their interest bills. You could fight the urge to stay away from the stock market when it goes down. If you don’t, you’ll miss out on important opportunities to make money from the market’s recovery and higher returns.

    During a recession, you might be able to buy fundamentally sound stocks at lower prices. Also, after doing a good job of researching stocks, you need to invest using a good investment strategy.

  • What Are Value Stocks?

    Growth stocks are companies that have a lot of room to grow. By buying shares in these kinds of companies, investors can make a lot of money through capital appreciation. However, investing in growth stocks requires the right research before you can buy them.

    Features

    People who like to take risks and want to make a lot of money on their investments should buy growth stocks. By looking at the following things, investors can easily find the best growth stocks and the companies that make them:

    Price to earnings ratio

    On the market, companies with a lot of growth potential are found, and shares of those companies have a high bid value. These companies’ growth stocks have a high price-to-earnings (P/E) ratio, which means they give a high return on total investment.

    People see a company’s full potential and think it will grow at a fast rate in the future if it has a high price-to-earnings ratio. But in some situations, a high P/E ratio can be misleading because it could mean that a business is overvalued. The performance of these kinds of businesses is caused by a boom, persistent inflation, or the growth of a financial bubble.

    One of the first things that the best growth stocks in India tend to have is a ratio of 1 or more.

    Price earnings to growth ratio
    Because the P/E ratio has some limitations, investors in India also look at the price-earnings to growth ratio to tell growth shares from standard equity shares. The main benefit of the PEG ratio over the P/E ratio is that it takes into account how much a company’s total earnings per share are growing each year.
    PEG Ratio = Market value of unit shares divided by the growth rate of earnings per share

    When a business has a high PEG ratio, it means that it has done very well. It is a better way to analyse a stock than the price-to-earnings ratio because it doesn’t give you false information.

    Strength of the company

    Companies can only give out growth stocks if they have a lot of room to grow and expand in the future. This can only be done if the company has a strong base, a good plan for business growth, and good management to reach the goals that have been set.

    It can be seen in the return on equity (RoE) value that is published every year. In India, companies that raise money through growth stocks usually have a record return on total equity of 15% or more per year.

    Why should you buy stocks that can grow?

    Capital appreciation
    Investing in the best growth stocks is done to make sure that a lot of money is made through large capital gains. These companies grow faster than the industry they are in, which means they make more money.

    Investing in growth stocks is only a way to make money in the long run. The long-term capital gains tax (LTCG), which is lower than the short-term taxation policy, applies to any capital gains made during this time. There is also a provision for indexation, which lowers people’s tax burdens even more.

    Prepare for rising prices
    The best growth stocks have returns that are much higher than the rate of inflation in an economy. In the long run, people’s purchasing power goes up, which means that their standard of living goes up because they have more money.

    Risks of growth stocks

    Growth companies look to make money by using aggressive business strategies to get a big share of the market. Investors lose a lot when these kinds of companies don’t pay dividends because they want to use the money instead to grow.

    During the lock-in period, investors don’t get any dividends, so if a business keeps losing money, in the long run, investors will lose all the money they put into it.

    Growth stocks are usually issued by companies that are still growing and changing, so they are very risky. They are very sensitive to changes in the market because they are volatile. Even though this feature lets businesses make huge profits when the market goes up, even a small change in price can cause losses. Investing in the best growth stocks should depend on how the market is doing. The underlying performance of growth stocks can also be caused by a country’s stable economy. If there is a financial bubble, companies that work in that sector tend to do better than they should. This kind of growth can be deceiving because it is caused by a strange thing in the economy.

    In order to make enough money, investing in growth shares in India requires a thorough analysis of both the companies chosen and the social and economic conditions at the time.

  • How To Choose Between Value and Growth Stocks?How To Choose Between Value and Growth Stocks?

    When it comes to making investments, investors have a lot of choices, such as debt vs. equity, active vs. passive funds, mutual funds vs. stocks, value vs. growth investing, and so on. Investors can choose between growth investing and value investing when they put money into the stock market.


    Both strategies help investors make more money on the stock market, but they do so in different ways and are widely used.

    Fundamental research is a good way to tell the difference between value stocks and growth stocks. Let’s look closely at each type before we say what makes them different.

    Before we get into choosing growth stocks, the primary aspect of every trader’s life is technology. At Zebu an online stock trading company we offer the best
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    Investment in growth stocks
    The Growth Investing strategy looks for companies that have a higher chance of outperforming their earnings and are expected to keep giving high returns on profit growth. Small-cap, mid-cap, and large-cap funds all have growth stocks. Investors are willing to put money into something and pay a higher price if they think it will grow or give them a higher return soon.

    Investors are optimistic about the company’s business plan and its chances of growth in the near future. Several things, like the company’s position in the market or the belief that its next line of products will be well received, can give investors confidence.

    Also, these stocks are more “expensive” than those of their competitors because their price-to-earnings ratio is higher. This is why investors are willing to pay more for these stocks than they are currently making because they think the price will be worth it in the long run.

    Investment in value stocks

    The value investing method usually looks for stocks that are undervalued, or whose current market price is lower than what they are really worth. So, they move along slowly, but they are worth more in the long run. The idea is that the market will quickly see how valuable it is, and the share price will then “catch up,” leading to big profits. So, if the actual value of a share of stock is Rs. 100, but it is currently trading at Rs. 75, an analyst will think this is a good value pay.

    There are many things that can cause value stocks to be undervalued, such as the economy, legal problems, bad press, disappointing earnings, etc. All of these things make us question how well the company will do in the long run. But they come back slowly. Value stocks are best for investors who want to hold them for a long time, and their prices may be more likely to change than those of growth stocks.

    DIFFERENCE BETWEEN VALUE V/S GROWTH INVESTING

    An important difference between value stocks and growth stocks is that value stocks have a better chance of beating their peers when interest rates go down and corporate earnings go up. But when the economy slows down, it will be the first to pay the price. Value stocks, on the other hand, may do well in the early stages of an economic recovery, but they are more likely to do poorly in a long-term bull market, when constant media coverage, a rumor, or a news story about the company’s management could cause a panic sell-off.

    VALUE V/S GROWTH INVESTING: WHICH IS BETTER?

    There is no right or wrong way to choose between growth investing and value investing when investing in the stock market. Instead, each method has its own set of goals, benefits, and risks. Because of this, it is best to use a combination of investment styles instead of just one, since both have their pros and cons.

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  • How to Invest in the Stock Market During Inflation

    The economy is always changing, and it can be hard to make investments when things are always changing. Investors are having a hard time right now because the economy is showing all the signs of inflation. So, how do investors invest now, especially if they want to put their money in the stock market?

    Are you planning to invest in the stock market? If yes, then you should definitely try Zebu’s online trading platform which will help you manage your trading seamlessly. At Zebu, a share market brokerage firm we also understand that online brokerage is a major problem, hence offer lowest brokerage options to our customers

    With higher rates of inflation, the IPOs of startups going public are becoming an ever more appealing way to get people to invest. But it’s worth going back in time to get a better idea of how the economy worked in the past. The last 10 years, from 2011 to 2020, had low inflation and moderate growth. During the first decade, especially from 2002 to 2007, growth was higher, but inflation went up.

    We are at a time when growth is slow and prices are going up fast. There is a lot of uncertainty in the world today, and rising geopolitical tension is making it worse. But even though the markets have recently gone down, starting prices are still high. If you want to trade stocks when inflation is high, you can, but you should be careful.

    How the Indian economy is doing

    The Indian economy is in a macro situation right now, which can hurt most emerging markets. Many countries with “emerging markets” (some of which are closer to India than others) are in economic trouble. Because of this, FIIs are pulling their money out of these markets. Since October 2021, this has been the case with India. Still, India is better off than other countries in the same situation when it comes to inflation. This is one of the most optimistic signs for investors.

    Using Investor Awareness to Trade on the Stock Market

    Why is India a good market for investments, even if they are in the stock market? For one thing, India’s economy is back on track after all the problems of the past few years. The services sector, which has been slowing down for the past few years, is also showing signs of getting back on its feet. Also, the amount of debt owed to countries outside of Canada is low, and the country has enough foreign exchange reserves to cover CAD projections and debt payments to countries outside of Canada. In this situation, investors who buy stocks need to be careful, because investing in the markets is risky. Investors who want to open a Demat account and invest in stocks that will do well during times of inflation should keep in mind the following:

    Investors should be ready for more volatility for the next 6 to 9 months.

    Investors shouldn’t expect big returns and shouldn’t think that the returns of the last two years will happen again.
    If an investor wants to invest a large sum all at once, they can choose funds that have a balanced mix of debt and stocks.
    Hybrid funds are a good choice for investors who like to play it safe.
    Using an STP or SIP, you should spread out your investments in small and mid-cap stocks over the next 6 to 9 months.

    A Time to Invest Carefully

    You might be interested in investing in the stock market because there are a lot of IPOs coming up. It’s easy to open a Demat account and start investing with Zebu, but if you do so now, you must do your research on stocks and invest carefully.

    If you planning to invest in the stock market then you should definitely try Zebu’s online trading platform which will help you manage your trading seamlessly. At Zebu, a share broker firm we also understand that online brokerage is a major problem, hence offer the lowest brokerage options to our customers