Apart from a minor dip or some rise here or there, the country’s leading benchmark, the KSE-100, this past week mainly remained consistent, trading in the vicinity of 12,000 points. The volumes, the real indicator of investor interest and enthusiasm, mostly remained in the placid zone.
And this period of quiet is likely to extend itself for a while, with investors visiting their brokers probably more often with renewed vigour and energy some time after mid-December with the intent to chase the scrips that close their books at the year-end. The Average Joe among them must then be looking for lower-end shares that offer around 20 per cent or thereabouts in a couple of months. Essentially there is no harm in going for big-ticket buys, but the long-term uncertain both locally and globally, it is advisable to keep oneself in check, and limit risk by staying to the lower-end purchases. Last week one had mentioned Bank Alfalah as a possibility. At under Rs12 apiece, riding at the back of good financial reports spread over three quarters, this is likely to appreciate and go up anywhere between Rs14-16 around the last week of February 2012. If it all remains constant, and it actually does, those taking a risk at this entity may get a smart return.
The problem with Bank Alfalah is that in the good old days it traded between the Rs40-50 band and when it hit rock bottom mostly owing to poor management, it never came back enough to go beyond its base price. The management has since changed but perceptions persist. This year if it offers a decent return, through dividend or capital gain, it may well get to move upwards over the next few years. In other words, it could be good as a short or long term investment.
Though one had a setback with this particular share in 2007, selling it way short a year later, one would want to take a wager on Bank Alfalah. Here I must mention that I had then taken a jump on this particular one against the advice of my stock consultant, Mian Nusrat-ud-Din, who had surmised that the only direction this particular stock can go is down. So there was only myself to blame for the consequences of not heeding the calculations of a past master.
One has tried to insist on this before, and it merits repeating, that all investments should be made on research based on profitability – and an Average Joe must still verify the facts before committing his cash to it.
MND still is not really hot on Bank Alfalah. If you ask him, he has his eyes on three other banks, one slightly higher rated, in the above Rs100 apiece zone, the next in the middle in Rs60 range, and the last at half that at around Rs30 – meaning thereby that you have plenty of varied choice that you could opt for in accordance with how deep your pocket is lined up. These three are, in descending order, Habib Bank Limited, Allied Bank Limited and Bank Al-Habib. All three are quoted way lower at this point in time than they were at their high last February 2011 (HBL then at Rs142 compared to Rs119 now, ABL at Rs74 then, now Rs63, Bank Al-Habib Rs39.49 then, Rs30 now). Another benchmark, earning per share after three quarters last year and now also reflect positively in case of all three. Which means that unless something crazy happens between now and February 2012, profit in the vicinity of 20 per cent is more or less assured.
Next week one would take a look at other December-closing sectors, in particular the otherwise hot fertilizer sector that is threatened by the chronic shortage of gas that becomes acute to the point of crippling for the industries in the winter months.
The writer is Sports and Magazines Editor, Pakistan Today
