As the broader market is trading at an all-time high, it becomes crucial to carefully pick stocks that are still undervalued and have a decent room to provide capital appreciation to investors. The easiest way to find such stocks is to log into your InvestingPro+ account and head to the screener section.
Investors can directly go to a strategy called “Strong Upside”. There are 4 parameters in this already-made set of rules to spot potential high performers. Investors can remove two of them namely - Market cap (adjusted) and Fair value Uncertainty to expand the list of stocks.
So What do the remaining two parameters do?
The first one, Fair value upside finds stocks that have a fair value of at least 10% higher than the CMP. This fair value is the average of many financial models used to calculate separate intrinsic values, after which an average of all is taken. This negates the extremes in the valuations that could arise from different types of models.
The second type of upside potential is being calculated through analysts’ expectations. InvestingPro+ combines all such targets from famous rating agencies, brokerage houses, etc. and again calculates the average of them all. If the average target of all is above 10% from the CMP, the stock will come on your radar.
SPECIAL OFFER: As a reader of Investing.com, you are eligible for a special offer for our InvestingPro stock market strategy and fundamental analysis platform at a discounted rate, with a 10% additional discount over the existing 40% for 2 years, thanks to the promo code "PROC324", valid for 1 and 2-year Pro+ and Pro subscriptions!
As of today, some of the stocks that have come up on the screener are PVR (NS:PVRL) Inox which has an upside of 17% (fair value INR 1,606) and an average analysts’ target of INR 1,800, which is a 31% upside.
DCB Bank (NS:DCBA) - A financial lender that seems to have a good upside potential of 30%, as its fair value is INR 172.7. In fact, the lowest target among all 3 financial models is also noticeably higher than the CMP, of INR 166. The average analysts’ target is a decent INR 153.8.
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