2 Stocks Ready for a Bull Run

Indian equity indices continued their winning streak with BSE Sensex and NSE Nifty at fresh new high levels. BSE Sensex surged 2.37% to close at 58,296.91 on September 6, whereas NSE Nifty surpassed the 17,350 mark to end at 17,377.80. IT and realty stocks led the rally that was partly pulled by banking stocks. Metal stocks showed a mixed bag with NALCO, Vedanta, Hindalco, and Hindustan Zinc (NS:HZNC) settling in green. Those who closed in red included SAIL (NS:SAIL), NMDC (NS:NMDC), Tata Steel (NS:TISC), and JSW Steel (NS:JSTL). Here we are covering two stocks with a solid potential to generate decent returns going ahead.

1. National Aluminum Co. Ltd. (NS:NALU)

Established in 1981 as a Navaratna Group A CPSE, National Aluminium Company (or NALCO). The company manufactures Alumina and Aluminium and is the lowest cost producer of metallurgical grade alumina globally. NALCO is also the lowest-cost producer of bauxite in the world. The stock is trading at a 10-year high and has crossed Rs 100 intraday level since April 2011. After a revolt in Guinea against its President, the special forces have expelled him in a deposition. You should note that Guinea has the largest bauxite reserves in the world. The country's contribution is around a fourth of the world's bauxite production. Analysts predict that the special forces' land and air borders of Guinea can lead to supply disruptions. These disruptions coupled with tumult could well ignite a sharp rise in alumina prices.

But wait, this isn't the only reason. Aluminum prices are trading at an all-time high due to supply constraints and high demand in the market. As the world returns to normalcy, the aluminum requirement has gone up. This year, China has trimmed 2 million tonnes of aluminum production capacity on account of curbs by regulators. The overall effect is a sharp rise in aluminum prices in the domestic market. Reports of coal shortages at multiple power plants also pushed the prices northward. Although Nalco stock surged 174% in a year, it still has the potential to rise. The company's balance sheet looks relatively healthy with almost no debt. NALCO still trades at a PE of 11.3x, much lower than Hindalco's 15x. FIIs, DIIs, and MFs have marginally increased their holding in the last two quarters ending June 2021. With RSI above 65 and MACD line crossing the signal line below, the stock appears bullish on the technical front.

2. Antony Waste Handling Cell Pvt Ltd (NS:ANTO)

Incorporated in 2011, Antony Waste Handling Cell offers waste management services. It provides waste collection, road sweeping, debris processing, and waste management services in India. ACL's 90% of revenue comes from waste collection and waste disposal. It is probably the only listed company in its class with a unique business. India's growing population is expediting the pace of urbanization in the country. Rapid urbanization has resulted in increasing consumption of packaged food, ultimately resulting in more waste creation. Anthony Waste is perhaps the only listed company with this business model. The government of India's focus on cleanliness and waste management through schemes such as Atal Mission for Rejuvenation & Urban Transformation (AMRUT), Swatch Bharat Mission, smart cities initiatives for proper waste management, and incentives & financial support augurs well for the company. According to Frost & Sullivan, India's municipal solid waste management market size is Rs 5,000 crore, and the projected CAGR is 14.4% for FY2020-25, touching Rs 9,800 crore.

In Q1FY2022, AWHCL's total consolidated income from operations jumped 58.6% to Rs 145.37 crore from Rs 91.66 crore in Q1FY2021. From a net loss of Rs 12.4 crore, the company reported a net profit of Rs 16.76 crore in the first quarter of fiscal 2022. Notably, FIIs, DIIs, and MFs have marginally increased their holding in two successive quarters ending June 2021. Although year-to-date returns are negative 7%, the scrip delivered 28% returns in six months. The RSI is hovering near 60, and the MACD line has crossed the signal line from below. It indicates positive momentum in the scrip.