Finding stocks that can beat the index is a mix of analysis, strategy and betting on the right sectors. Investors are constantly looking out for indicators that can point to stocks with high potential upside.
One useful indicator is stocks that have gained value over the past month but are still trading well below (>30%) their 52-week highs.
Ahead of September quarter results, we look for stocks showing positive changes over the past month but are still far from their 52-week highs (>30% distance). This screener includes a total of 15 such Nifty 500 stocks.
Chemical & petrochemical stocks rise on new products and PLI schemes
Of the 15 stocks in the screener, five are from the chemical & petrochemical sector. In a welcome development for the raw material-sensitive sector, the Finance Minister, Nirmala Sitharaman on July 23 announced that the Centre is considering a Production Linked Incentive (PLI) scheme to promote Industry 4.0, aimed to reduce carbon intensity across the industry.
In chemicals, Deepak Fertilisers & Petrochemicals has risen by 12.6% in the past month. It is currently 42.4% away from its 52-week high. This chemical manufacturer signed two purchase agreements with GAIL, causing its stock to rise by 3.3% on September 4. Hopes for new urea orders also helped, especially after China halted its exports on September 7.
The second stock from the sector, Epigral’s share price rose by 11.3% in the past month and is currently 41.8% below its 52-week high. This boost came after it recently announced a venture into the production of chlorinated polyvinyl chloride (CPVC) compounds, with an additional capex of Rs 25 crore.
Aarti Industries also rose by 12% over the past month. It is currently 43.1% away from its 52-week high. According to Sharekhan, the company’s Nitrotoluene volumes increased by 77.6% YoY, opening up an untapped market in India. The company is planning to invest Rs 3,000 crore in this product line in FY24 and FY25.
Packaging majors rise with growing market demand
Two key players in the containers & packaging sector, Uflex and Polyplex Corp, rose by 16.4% and 3.7%, respectively in the past month, and are currently 44% and 46.9% below their 52-week highs.
Uflex’s CMD, Ashok Chaturvedi, highlighted increased demand in India as a driving force. He noted that the company's recently inaugurated plastic and polyester film manufacturing lines in Dharwad, Karnataka, are in operation. This expansion has resulted in an impressive 22% YoY increase in sales volume for the quarter, which can be attributed to the month change.
Software & services stocks grow on strong order books and new regions
Moving on to the software & services sector, which has three standout stocks: FSN E-Commerce Ventures surged by 7.5% in the past month and is currently 39.8% below its 52-week high. The company’s revenue improved by 24% YoY in Q1FY24. According to ICICI Securities, the firm’s order conversion rate, a sign of quality traffic, continues to improve.
The personal care business reported an average order value (AOV) of Rs 1,849, up 4% YoY, while the fashion business saw a robust AOV of Rs 4,058, a 9% YoY increase.
Another stock in this sector, Quess Corp rose by 5.6% in the past month and currently trades 35.6% below its 52-week high.
Easy Trip Planners rose by 15.3% in the past month and is currently trading 41.4% below its 52-week high. The company acquired a 51% stake in three companies, Guideline Travels Holidays India, Dook Travels, and Tripshope Travel Technologies, which led the stock price to surge by 2% on August 1. The management also indicated that their Dubai operations saw strong growth, with revenue reaching Rs 53 crore in Q1FY24, a 22% QoQ increase.
In summary, this screener throws light on diverse sectoral trends. The chemical & petrochemical sector stands to gain from new products and a potential PLI scheme. Commercial services are responding to market demand, while software & services firms are expanding their order books. Investors will have to wait for Q2FY24 results for further insights into corporate performance.
