STOCK ANALYSIS: BUYING AND SELLING DECISIONS

BUYING AND SELLING DECISIONS
3 mn read

Hindustan Unilever Ltd

Sell: Sustainable but not persistent

  • Volatile condition of Indian market and unstable and fluctuated situation of Indian rupee
  • GST- driven policies
  • Profitable outcomes but slow pace of volume growth

Several of factors are contributing to the weak state of the Indian rupee, and in coming months it is anticipated that volatile condition of rupee will persist. Because of this volatility rupee becomes receptive to the foreign portfolios flows in the last few years and turn this phenomenon affect its debt and equity dimensions. It is also expected that in the first half of the financial year 2018 Indian rupee will continue to stay back from the foreign portfolio flow’s standpoint. Evidently, any stakeholder that holds foreign stocks is unsurprisingly vulnerable to the fluctuations of the exchange rate. And the decisions regarding the performance of the portfolio as well as hedging the foreign exchange risks depend on the interconnectivity and correlation of currency returns and equity. Along with fluctuated situation of Indian rupee; Indian market too, affirms volatile market conditions that somehow impedes the pace of volume growth and in turn impacts the investors’ decisions reading buying, selling or holding on the stock.

In past decades Indian economy observed severe business and governmental trading policies and confronted a higher GST. However, recently GST rates are diminished, and for some specific business categories; it becomes twenty-eight to eighteen percent. The government implements this rate immediately, and consequently, it simultaneously affects the Hindustan Unilever Limited’s volume growth but only slightly. The stats depict volume growth of 11% for HUL after the cuts in GST driven prices, but the rate is prolonged and will take time to get established. Nevertheless, HUL demonstrates overall growth in the company’s revenues by 14%, yet the risk-reward is still on the downside and in the absence of quick resurgence of volume growth, it features a risk of de-rating. Homecare industry is doing well in the Indian economy, but the market for personal care products is still encountering a modest augmentation. By analyzing all above-given factors, it is recommended to sell the stocks of Hindustan Unilever Limited.

Ralph Lauren Corporation

Buy: do not G.I.V.E; buy

  • Stable dollar
  • Likelihood of established and stronger economy
  • Profitably analysis shows substantial gains

The United States’ economy was facing rapid inflation and depicted different issues regarding jobs and consumer prices in previous years. However, the recent progress that asserted through a minutes meeting of Federal Open Market Committee took place in late January 2018 and affirmed the elevated expectations of increased rates in coming months. At the same time, the stability of US dollar was estimated by a famous dollar measurement that conducted by ICE, the United States dollar index boosted up and increased up to 0.4%. All underlying factors suggest that the financial markets and economy of the United States indicate a steady and more secured economy as compared to the economic condition encountered at the end of the year 2017. The officials addressed this development as the “further gradual increases.”

Along with the economy of the United States; the profitability analyses for Ralph Lauren too, portray a stable and robust condition that is, of course, an outcome of flourishing and productive market environment. Ralph Lauren updates show a net profit margin of 1.3% meanwhile its operating profit margins and gross profit margins are 2.3 and 58% respectively. RL’s beta factor estimated at 0.58. Based on the improving market and economy and substantially steady status of US dollar it is recommended to investors to do not involve in the selling of Ralph Lauren’s stock and adhered a bit if they already invested with RL. Moreover, it is a right time to take investing decision and buy shares of Ralph Lauren because analysts are anticipating low and high revenue for the business that is 1.28 billion and 1.37 billion dollars in that order.

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