Legendary investor Warren Buffett made his
first trip to India this year
, looking for companies to add to the portfolio of Berkshire
). Sterlite Industries (
) is the sort of dividend paying stock he was looking for.
Sterlite would fit in well with other Berkshire Hathaway holdings
that profit from growth in emerging market countries such as
) and Coca-Cola (
Buffett favors companies in basic, solid
industries. Sterlite operates as a non-ferrous metals and
mining company in India and internationally.
The company's primary products consist of copper cathode and
continuous cast rods, phosphoric acid, anode slimes and
It also produces and sells zinc ingots for steel producers, as
well as alloy, dry cell battery, die casting and chemical
manufacturers; lead ingots for battery and chemical
manufacturers; and by-products including sulphuric acid and
silver ingots primarily for industrial users and
Sterlite is primarily known for its copper operations
and the red metal (
) is down due to slumping economic growth in China, India and
This is what makes Sterlite so attractive for value investing,
in addition to its healthy profit margin of 14.18%. The current
price to book-ratio is 0.76, so Sterlite is trading for less
than the book value of its assets.
The price-to-sales ratio is 0.82, meaning that the value of
sales is being discounted by nearly 25% in the stock price.
As a dividend paying stock, Sterlite has a yield of
2.1%. That's about the average yield for a member of the
Standard & Poor's 500 Index, but at just
19.64%, Sterlite has a dividend payout ratio much lower than
the historic average for an S&P 500 company. This means
there is ample cash flow for dividend growth.
Now trading around $7.30 a share, the mean analyst target
price for Sterlite over the next year is $11.41. The mean
analyst rating is a 1, the highest possible: a unanimous "strong