Fuel and power most lucrative stocks, say analysts

Fuel and power is the most lucrative sector in the stockmarket now as the companies in the sector are performing better amid the government's renewed emphasis, analysts said.
The price-to-earnings (P/E) ratio hit a six-year low at 12.58 on Wednesday, which was 26.54 in June 2006, according to Dhaka Stock Exchange.
“The listed companies in this sector have low risk and the amount of profit is high compared to other sectors,” said Prof Mahmood Osman Imam, who teaches finance at Dhaka University.
The P/E ratio declined as the market is depressed now, said Imam. He said the government is also serious about developing the sector.
Finance Minister AMA Muhith in the budget for the upcoming fiscal year emphasised the power and energy sector by allocating Tk 9,544 crore for the sector. The allocation is up by more than a thousand crore taka from that in the outgoing fiscal year.
The government has a plan to take the electricity generation capacity of the country to 8,294MW by next year, Muhith said in his budget speech early this month.
Shakil Rizvi, former president of the DSE, said people should invest more in the sector as it has strong potential.
The growth of the listed companies in the sector is good, said Rizvi.
He said the companies in the sector such as Power Grid, Desco, Meghna Petroleum and Jamuna Oil are performing well.
A total of 278 companies are listed on the stockmarket. Of the companies, the income of three doubled in the first quarter this year and these three firms are from the fuel and power sector -- Khulna Power Company Ltd, Meghna Petroleum and Jamuna Oil.
The EPS of seven companies was more than Tk 5 in the quarter, of which three companies are from the power sector.
The EPS of Linde Bangladesh was Tk 9.8, Meghna Petroleum Tk 6.40 and Jamuna Oil Tk 7.60.
Rizvi said the government should use the stockmarket to raise fund to develop the sector.
The government should give incentives to inspire the public and private fuel and power companies to be listed on the stockmarket, he added.
Abu Ahmed, a teacher of economics at Dhaka University, said: “The present P/E ratio indicates that the sector is good for investment.”
The PE ratio determines the time an investor needs to wait to get back the invested amount. It is an indicator for considering the extent of risks an investment might entail.
The PE ratio means a valuation ratio of a company's current share price compared to its earnings per share.
The indicator is also important to better understand what happens in the market after a large gain or decline
People should invest in the specific stocks based on their fundamentals and growth prospect, said Ahmed.
He said if a company can maintain stable earnings per shares for three years in a row, it will be treated as a good company.

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