Should I Hold or Exit Coal India with Losses at 240?
Investing in the stock market, especially in large-cap companies like Coal India Limited (CIL), comes with its own set of uncertainties and challenges. With 100 shares currently priced at $240 per share, many investors are questioning whether they should hold or exit the investment. Let's delve into the latest performance of CIL, along with some expert advice to guide your decision.
Performance of Coal India Limited
COAL INDIA LIMITED, known as CIL, is a large-cap company primarily engaged in the business of coal. The latest financial quarter (Jun-2022) saw significant growth in both sales and earnings, with QoQ (Quarter-over-Quarter) Sales Growth at 38.8% and Earnings Growth at 187.76%.
The company's track record over the last three quarters shows a positive trend, with three consecutive positive quarters, no fair quarters, and no negative quarters. The current algorithmic indicators suggest a strong exit recommendation at the current price of 246.05, with the stock price nearing a previous high. The downside risk is assessed at 25.2%, while the upside reward is -0.4%, indicating a skewed risk-to-reward ratio.
Expert Opinions and Analysis
Given the current market dynamics and the performance of CIL, several experts recommend a cautious approach. One expert suggests:
Hold for 5 years. You could have averaged at 125, where CIL was struggling for quite some time. Typically, CIL used to trade near 260 before March 2020. In good times, that's where CIL will trade. In two years, you can easily exit CIL at 260, which is a decent profit. Meanwhile, around 30/- will be in dividends in the next two years.
Another expert offers a more detailed outlook:
If you are skeptical of making a decision, it is understandable that your brain might be signaling to avoid the investment. However, if you have done the proper analysis, and still, there's some uncertainty, here are a few recommendations:
COAL India is the largest coal supplier in India, but the quality of coal might vary significantly, ranging from very low grade to high grade. Despite its role in supplying major power plants and generating good revenue for the government, CIL has seen a drastic fall in its growth over the last decade. The share has started with around 250 and now trades at approximately 150. The stock moves very slowly and is mostly range-bound, making it hard to expect good returns in the short term. The dividend yield is also not particularly attractive.Based on these factors, it is recommended to avoid investing in CIL at the moment. If you are still determined to proceed, here are some strategies:
Plan for gradual investment: Divide your funds into five equal portions and invest them over time. If the stock price trends upwards and surpasses the 52-week high, you can invest another portion. On the other hand, if a correction occurs, buy on dips. Avoid market timing: If you have a long-term investment perspective, avoid being affected by short-term fluctuations. Explore other options: For those who are intraday or short-term traders, strategies such as options trading can be considered, but ensure a considerable investment is made.If you are interested in learning more about investment strategies and derivatives, please join our free Telegram channel titled InvestWithMK. Our aim is to educate investors and help them make informed decisions for better financial planning.
Key Takeaways:
COAL India Limited shows positive trends but faces short-term challenges. Experts advise a cautious approach, recommending a gradual investment strategy or a wait-and-watch approach. Long-term investment strategy or exploring other trading options can be beneficial for investors.Remember, investing in the stock market carries risks. Always conduct thorough research before making any investment decisions.