Are you looking for the best shares to invest for long term in India? Great, this is just the right time to choose the best shares to invest and build a strong portfolio as markets have corrected significantly and many fundamentally sound stocks are available at huge discounts.
Rather than looking for individual names of stocks which can be considered as the best shares to invest, an investor should understand what makes a stock an outperformer.
To find the best shares to invest for long term investment one needs to look for companies with certain qualities which give them an economic advantage over their peers.
Some qualities which will help you identify the best shares to invest:
Companies offering products/ services with a powerful brand recall value
When one talks about life insurance, the first name that is likely to come in the mind is LIC. Similarly when someone thinks of instant noodles the first name likely to pop-up is Maggi. These are powerful and well-established brands with a huge fan base.
A powerful brand recall value means repeat business for the company from its loyal customer base. This also means the users are more likely to recommend it to their friends and acquaintances. So to find the best shares to invest for long term, an investor should look for companies in India which have a powerful brand recall value.
Companies with economies of large scale
Companies with economies of large scale are better placed to produce goods at a cheaper rate than competitors. Tata Steel, a company of the Tata group is India’s second-largest steel manufacturer. Tata Motors, another company of the same group is India’s largest commercial vehicle manufacturer. Steel is a critical component of the commercial vehicle segment and since Tata’s are able to source it from their own group company they not only enjoy the benefit of economies of large scale but also a cost advantage. Hence when looking for the best shares to invest for long term, an investor should look for companies in India which have a powerful brand recall value.
Companies with monopolistic business model
Any company which is the only supplier of a product or service has a monopoly as there are zero no competitors. The best example of this is Coal India, India’s largest coal producer which contributes over 80 % of the coal production in India. Similarly, oil marketing companies like HPCL, BPCL and IOC have huge monopoly in the oil and gas sector.
To summarize, there are many factors which makes a stock an outperformer. The above qualities are some of the most important factors which can help you in finding the best shares to invest.
Disclaimer: The names of companies or stocks mentioned above have been used only for providing an example and should not be considered as a recommendation for best shares to invest.
Read more: How Long-term investing helps create life-changing wealth – TOI.