High-flying High-Flying PE-Rich Stocks May Not be Worth Your Time
It is tempting to buy high-flying multinational or domestic stocks at sky-high valuations. They have good financial and dividend track record and the strong global linkages guarantee good export volumes insulating them from domestic slowdown fears. But the fact that they have been rising continuously despite super-rich valuations could also mean something else. Desperate fund managers trying out NAV management and investors piling into just any story about growth with little regard for sober investing. Shares of Jubilant FoodWorks, Bosch, Honeywell Automation, GSK Pharma and others have risen up to 26% in past two months. These stocks already command a price-to-earnings multiple of 40-50 times. What’s more, the rise has been accompanied by extremely average trading volumes (see table). One reason for the surge could be an attempt to play the delisting theme though no announcements have been made as yet. Investors holding these shares or wanting to buy may need to be a bit careful.
—Biswajit Baruah Jubilant FoodWorks Bosch GSK Pharmaceuticals Honeywell Automation P&G Hygiene & Health Symphony WABCO India Fag Bearings India P/E 12 Mth Fwd (` Crore) % Chg Since 1 Mar ’16 12 Mth Avg Del % Vol 12 Mth Avg Vol 12M Del