3 Stocks That Could Rally When Economic Recovery Happens

The economy has been sluggish with high frequency data, particularly auto numbers pointing to a sharp reversal in economic growth. However, there are hopes that the festive season in the last quarter of this year, may see a revival in the economy. Here are three stocks that could benefit in the case of a sharp revival in the economy. Mahindra and Mahindra Financial Services is a great play on rural sector, thanks to tractor financing. The company reported a poor set of numbers for the quarter ending June 30, 2019. The net profits at the company plunged and the asset quality too weakened.The gross non performing assets of the company also increased by 150 basis points. However, there are reasons to be buying the stock of Mahindra and Mahindra Financial Services. The company has been looking to diversify into new segments like pre-owned vehicles and commercial vehicles.Interest rates in the economy have fallen considerably in the last few quarters. This should benefit a company like Mahindra & Mahindra Financial Services.The shares of the company have fallen from levels of Rs 495 to the current levels of Rs 299. The stock is available at a p/e of around 12 times one year forward earnings, which is rather attractive.Advertisement This stock too like Mahindra and Mahindra Financial Services, comes with a solid promoter background. The company reported a very subdued set of numbers for the quarter ending June 30, 2019. Net profits at the NBFC rose 2 per cent to Rs 549 crore for the quarter ended June 30, 2019 as against Rs 538 crore.NBFCs have been facing a tough time in the last few quarters on account of liquidity and other constraints. Considering the tough background, the results were not bad at all. We believe that a recovery in the markets will eventually lead to strong growth in companies like L&T Finance Holdings. The company can report an EPS of close to Rs 10 for 2019-20. This means the stock is discounted at about 10 times one year forward earnings, which is not expensive at all. Coal India reported a good set of numbers for the quarter ending June 30, 2019. Net profits at the firm rose 22.3 per cent to Rs 4,629.87 crore. The government owned firm had posted a net profit of Rs 3,786.40 crore in the year ago period. Jefferies has revised the target on the stock to Rs 275. The shares at these levels have a minimum downward risk and the dividend yield on them can be as close as 7 per cent.In fact, this year the company may enhance its dividends further, given the strain the government may face over resource mobilization.The stock is also very close to its 52-week low price of Rs 195. It currently trades at Rs 198. The downside risk on the stock is very minimal at the current levels. Buy the shares for long-term gains. This article is strictly for informational purposes only. It is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author of this article do not accept culpability for losses and/or damages arising based on information in this article.GoodReturns.in