You may be familiar with the “Coffee Can investing Portfolio.” Do you want to know what it is? Let us assist you.

Coffee Can investing Portfolio is nothing but an investment technique. By purchasing shares of great firms and holding them for 10 years without actively buying and selling them, Coffee Can Investing is a low-risk strategy to amass significant wealth.

What is a “Coffee Can Investing Portfolio”?

“Coffee Can Investing” is the term used to describe the “buy and forget” method of investing in shares of firms that have continuously performed well.

Those who invest in such shares develop a wide portfolio of consistently performing companies, acquire their stocks, and keep them for at least 10 years. This type of share investment forms a “Coffee Can Portfolio.”

It is primarily a long-term investment plan with a horizon of at least ten years. At the end of ten years, you will have between two and four outperformers, some equities that have not increased, and those that have lost value. A significant return on investment will be offered by those outperformers.

What Is the Origin of the Term “Coffee Can Investing Portfolio”?

“Coffee Can Investing” was first used by Robert G. Kirby in 1984. People kept all of their valuables in coffee cans in the Old West of America. These cans were then tucked under the mattress. Before the banking system was established, the system was widely used.

Similar to this, investors choose high-performing stocks for the Coffee Can Portfolio, invest in them, and hold them for a long time. Similar to how they did in 1984 when they put stuff in a coffee can and promptly forgot about them, they acquire shares and then disregard them.

What Does It Mean in the Indian Context?

Industry and literature both contributed to the success of Coffee Can Investment. Ambit Capital and a book on Coffee Can Portfolio by Saurabh Mukherjea and Rakshit Rajan called “The Unusual Billionaires” were the first to use the phrase in the Indian context.

A coffee-can investing portfolio is described in the book in terms of India. It refers to businesses using the Coffee Can Investing strategy that have produced a return on capital (ROCE) of over 15% annually. As a result, the strategy offers a low-risk means of accumulating enormous wealth.

Fun fact: For many years, Indian women have been saving money in shopping boxes and using it for future investments by investing it in coffee cans.

How to Build a Coffee Can Portfolio

The pandemic taught us many new things, but learning more about stock market investment must rank among the top ones. Given that actual money is at stake, it is not a simple topic. There are horrific tales of folks who lost all of their savings in a split second.

Long-term investing has various benefits, including dividends and compounding. You will receive a portion of the dividend that the corporation declares over your holdings.

The main focus of the Coffee Can investing Portfolio is stock quality. You must choose a quality stock because it indicates a company with strong foundations.

Here are some ideas for creating a coffee can portfolio.

• Return on Capital Employed (ROCE) is a ratio that evaluates a company’s financial performance. The company’s ROCE should be higher than the market’s cost of capital during the previous ten years. A ROCE of above 15% is regarded as favourable for 10 years.
• You need to keep track of a company’s history. It makes sense to invest if the company has been around for more than ten years.
• Investing is not a smart move if a company has a negative cash flow from operations.
• The profitability of a business in terms of the equity of the shareholders is determined by ROE, or return on equity. For ten years, a company’s ROE of >16% is regarded as a good option. An average ROE over five years is > 18%, and an average ROE over three years is > 20%. For a coffee can portfolio, we need some reliable compounders with CAGRs of at least 15% over a period of several years.
• Market capitalization: The market capitalisation, often known as the market cap, of a company is determined every day. It represents the market value of its stock shares in dollars. The ideal companies to include in a coffee can portfolio are those with a market capitalization of more than 3000 crores.
• The dividend yield for the company should be greater than 1%. A reasonable dividend yield is often seen as falling between 2% and 6%. The main justification for selecting high dividend-paying stocks is that businesses that pay high dividends are likely to be profitable. Even if the value of your stock doesn’t increase significantly, dividends can still provide some income. Even if the value of your stock doesn’t increase significantly, dividends can still provide some income.
• The company’s debt-to-equity ratio needs to be under 1%. Over this level, the ratio becomes riskier.
• Sales growth is the increase in a company’s sales over a specific time period. For the company to be a wise investment, sales growth of at least 10% is required.
• The business needs a strong competitive advantage and a well-known brand value.
• You can create a coffee can portfolio with the aid of a screener.
• •Pick stocks from various industries. For a coffee can portfolio, it is not advised to allocate more than 25% to a single segment unless you are quite convinced.

How to Invest in coffee can investing portfolio

There are three strategies you can follow

Strategy 1: Make an annual investment

Investors that have a fund of money to invest will benefit from this. It is usable by

Employees on a salary who earn their annual bonus around the same time each year

Real estate, mutual funds, or other equities may be used in the reinvestment of asset sales.

Strategy 2: Systematic Investment Plan (SIP) 

The smallcase tool from Zerodha can be used for this. It enables you to build a personalised portfolio and monitor performance in relation to Nifty. The beginning value of the first investment is determined by the weighting system you have chosen, current stock prices, and the initial value of the investment. It will be “Equi-Weighted” for Coffee Can Investing purposes.

Strategy 3: Buy on dips 

Buying an asset following a price decline in the expectation that it will increase in value later on is referred to as “buying the dips.” The technique can be applied to rebalance an existing portfolio or to purchase a new asset.

You can establish a rule and invest when the market experiences a large decline. It may result in a portfolio decline of 5% in a single day, 8% in a week, or 10% in a month.

Benefits of Coffee Can Portfolio:

• People who don’t have the time to frequently examine their money are better off using a long-term investment approach. It excludes taking part actively in the marketplace.

• It is also appropriate for those who are saving up a sizable sum of money to spend on a worthwhile project. They may have made a significant profit in real estate and are seeking to reinvest their earnings. They will undoubtedly search for another profitable strategy that will increase their gains.

• Long-term stock investing will allow compounding to increase your money’s value many times over. The potential of the invested sum to rise in value over time is what is known as compounding. If you wait, long-term investments will produce a respectable return.

Best Long Term Stocks India 2023: Performance Overview

To raise the value of their investments, wise retail investors frequently use long-term investing.

Along with fundamentals and qualitative factors like management quality and efficiency, one must take a long-term view of the financials when looking for the finest stocks to invest in for the long term in India. For investors, long term often refers to a period of more than 5 years.

Factors to Consider Before Choosing the Best Long Term stocks 2023:

1) At least Rs 10,000 crores should be the market capitalization of the stocks.

The market capitalization, in plain English, is the company’s market value. It is the cost at which you can purchase all of the company’s outstanding shares. It is determined by dividing the total number of outstanding shares by the market price per share. The market cap is likewise a dynamic quantity, much like the stock price.

It reveals the company’s size. Higher m-cap companies are more well-known, have already advanced to a certain point, and have lower risk levels and less volatility. Therefore, a big market cap is a great way to identify firms and choose the long-term stock to invest in if you want guaranteed and less variable returns.

2) Profit Growth for Three Years Should be More Than 10%

Net profit considers all facets of a company, as contrast to operating profit, which primarily considers the primary activity. It also shows the true profits of the entire company and takes into consideration charges like taxes and interest payments on a debt that is still owed.

The bottom line, or net profit, appears at the bottom of the profit statement after all costs and expenses have been taken into account.

A list of long-term stocks to buy in 2022 is provided below. To locate the best long-term stock to buy, you must first research the market before making an investment.

1) Reliance Industries 

One of the greatest stocks to purchase for the long term is Reliance Industries Limited, an Indian firm that operates in the Oil to Chemicals (02C), Oil and Gas, Retail, Digital Services, and Financial Services divisions.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Reliance Industries stock has traded during that time period (about one year). As of December 9, 2022, Reliance Industries’ 52-week high and low are 2,856.15 and 2,180.00, respectively.

2) Tata Consultancy Services (TCS)

One of the safest shares to purchase in India is Tata Consultancy Services Limited (TCS), an organisation established in India that offers information technology (IT) services as well as digital and business solutions.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a stock has traded during that time period (about one year). As of December 09, 2022, Tata Consultancy Services’ (TCS) 52-week high and low are 4,043.00 and 2,926.10 respectively.

3) Infosys

Information technology, outsourcing, and next-generation digital services are all areas of business for Infosys Limited.

The 52-week high/low is a technical indicator that represents the greatest and lowest price at which an Infosys stock has traded over the specified time period (roughly equivalent to one year). As of Dec 09, 2022, Infosys’ 52-week high and low are 1,953.90 and 1,399.25, respectively. It frequently appears on the annual list of safe stocks to purchase in India.

 4) HDFC Bank

Private sector bank HDFC Bank Limited (the Bank) is based in India. The Bank offers a variety of banking services, including transactional/branch banking for regular customers and commercial and investment banking for wholesale customers.

As of 09 Dec 2022, the 52-week high and low of HDFC Bank are 1,722.10 and 1,271.60 respectively. The 52-week high/low represents the highest and lowest price at which an HDFC Bank stock has traded during that time period (roughly equivalent to 1 year) and is regarded as a technical indicator.

5) Hindustan Unilever 

The consumer goods company Hindustan Unilever Limited is based in India.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 2022, Hindustan Unilever’s 52-week high and low are 2,741.60 and 1,901.55 respectively.

6) HCL Technologies 

The business is a top-five Indian IT corporation and a prominent supplier of technology and digitization solutions to clients all over the world. HCL Technologies provides a variety of services, including engineering and R&D, BPO services, remote infrastructure management, and software-led IT solutions.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 2022, Caplin Point Lab’s 52-week high and low are 1,359.40 and 877.35 respectively.

7) Bharti Airtel: 

This company can only expand as a result of the steady expansion of its 4G subscriber base and the strong stability of its quarterly results over the past few years.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 2022, Bharti Airtel’s 52-week high and low are 860.55 and 628.75 respectively.

8)  ICICI Bank–

 Strong performance for ICICI Bank indicates that this company is only headed for further expansion.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 2022, ICICI Bank’s 52-week high and low are 958.20 and 642.15 respectively.

9) Caplin Point Lab- 

The business manufactures and sources API, finishes formulations, conducts clinical research, and engages in R&D in the pharmaceutical industry.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 2022, Caplin Point Lab’s 52-week high and low are 888.00 and 626.00 respectively.

10) Marico-

It is one of the biggest consumer products corporations in India and has a presence all over the world. With multiple top brands in several categories, the company provides a variety of personal care, health, and beauty items.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 2022, Caplin Point Lab’s 52-week high and low are 554.35 and 455.65 respectively.

11)  Avanti Feeds

To fulfill the high demands of shrimp customers around the world, the firm offers farmers the greatest technological assistance and shrimp feeds.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 2022, Caplin Point Lab’s 52-week high and low are 638.80 and 364.10 respectively.

12) Bajaj Auto-

The Bajaj Group’s flagship company is a significant player in India’s two- and three-wheeler markets. The business exports its goods to more than 79 nations worldwide.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 22, Caplin Point Lab’s 52-week high and low are 4,131.75 and 3,027.05 respectively.

13) Tata Metaliks-

The company, a division of Tata Steel Limited, manufactures and sells ductile pipes and pig iron. In the past month, the company’s shares have increased by 7%.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 22, Caplin Point Lab’s 52-week high and low are 954.00 and 617.35 respectively.

14) APL Apollo Tubes- 

As the nation’s infrastructure development increases and APL Apollo Tubes offers steel tubes and pipes, which are essential for constructing infrastructure, the company stands to gain.

The business is currently India’s leading supplier of galvanised pipes, which have a variety of uses including fencing, cabling and ducting, automotive (bus bodies), greenhouse structures, gates and grills, electrical conduit, and scaffolding.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 22, Caplin Point Lab’s 52-week high and low are 1,193.00 and 770.90 respectively.

15) Polycab India-

Before diversifying into high profit FMEG (Fast Moving Electronic Goods) including fans, lighting & luminaries, and other consumer electronics, Polycab was a maker of copper wiring for infrastructure and other business needs. As India’s infrastructure continues to expand and as demand for energy increases there, the company has significant growth prospects.

To give you an indication of the margins produced by FMEG, consider that 96% of the company’s operating margins come from FMEG, despite the fact that copper wire goods currently account for 86% of its revenues.

The 52-week high/low is a technical indicator that represents the highest and lowest price at which a Hindustan Unilever stock has traded during that time period (roughly one year). As of Dec 09 22, Caplin Point Lab’s 52-week high and low are 2,862.50 and 2,043.85 respectively.

Additional Things to Remember:

Select a few financials, consider qualitative factors like management calibre, ethics, and CSR initiatives, and evaluate them using data that dates back at least three years.

Select industry leaders who have demonstrated enduring long-term performance by sorting companies based on their market capitalization.

Match your degree of risk to the company’s hazards. To comprehend aspects and dangers unique to a given industry, conduct a business and industry study.

Only invest in a business if you are familiar with it and what it does.

BOTTOM LINE- 

Investors who want to achieve a larger return than index funds and are prepared to invest for more than 10 years can consider Coffee Can Investing Portfolio. It is a suitable alternative to other options for people who want to invest passively.

Investors who want to achieve a larger return than index funds and are prepared to invest for more than 10 years can consider Coffee Can Portfolios. It is a suitable alternative to other options for people who want to invest passively.

If constructed with time and care, the Coffee Can Portfolio can produce wealth that exceeds your expectations. For those who can wait patiently for more than ten years, it is a good option.