After a long bear market, and after a thorough analysis of the stock market from my "Wanjiku" point of view, I have decided to start my buying spree. With the index hovering around the 3000 mark, I was curious to know which counters were massively undervalued. Interestingly, banking stocks are responsible for the low level of the NSE index. I believe that the banking counters are massively undervalued, despite the law passed capping interest rates. I believe that banks will be creative, to continue posting profits in the long run. For the next 12 months, I have decided to buy undervalued stocks (I have very limited knowledge in accounting). My investment horizon is until 2020 (3-4 years). I am of the opinion that the stock market will trade sideways for the next 6-12 months, after which bulls will return. My year-long journey has began today. Below is my pick:
Housing Finance Company
FY 2013 - 995 million
FY 2014 - 1.0988 billion
FY 2015 - 1.1835 billion
H1 2016 - 612.553 million (+26%)
Forward PE - 2.7
Dividend Yield - 8.87%
Buying Price - 14.65 per share
From the above information, it is clear that the company has been improving on profitability in the last three years, and this year's H1 results tell the same story. With a dividend yield of almost 9%(company has always paid dividends), and such a low forward PE, coupled with the growth in PAT over the last three and a half years, this is a good buy in my opinion. I will accumulate at any price below 15. Although I do not know how the new law will affect this counter, I assume that the management will devise clever ways of circumventing the law. At the height of the bull market, this counter had a PE of 13. If the company grows its profits, the return should be better.I will accumulate at any price below 15 as I hunt for another undervalued stock.
NB: I am no financial expert, this is my Wanjiku opinion.
#New Day#

Mimi nakondolea HFCK na nachunguza KCB nione kama inatosha mboga.

Safaricom - data revenue potential, has a higher profit margin than mpesa
KCB
Equity - if subsidiaries outside Kenya keep growing as fast
KCB - Kenyan subsidiary outpaces the rest in the industry
Kenol Kobil - reduced debt, improved sale volumes, growing market share
Kengen & Kenya Power - If i can get a dividend yield of 6% plus

you cannot go wrong with banks.+1 for kenolkobil though

I would still buy if i can get my dividend yield. The good thing about them is they are undervalued because of the govt shareholding. Nobody trusts this govt because of their looting. However they wont comprise of more than 10% of my portfolio.

i agree with u.No one trusts gava because of poor mgt.As long as u get a dividend,its okey for a small portio of one holding their.

Good stock

I hate their dividend yield and payout ratio. They always want to keep all the money. Am sure if it were not pressure from some shareholders they would keep all the money forever. EPS of 24 DPS of 2.5 yet its still not number 1

Its not a bank, its more of an investment company. And you can clearly see where the money is going. Growth is phenomenal.
DTB on the other hand, it performs on the same level or worse than KCB and Equity who have been paying out 30% -40% of their profits. Q3 2016 DTB had an 11.5% rise in profit, KCB 18%, Equity 18%.....With the interest rate cap expect dividends next year to be stagnant or go lower. DTB might decide to keep all the money

Yet Berkshire Hathaway does not invest in companies that dont pay dividends...why? I would rather invest in the companies that it invests in, than Berkshire Hathatway itself.