As the tide rises, so do all boats. Lazy investors cite it all the time. Active investors, however, speak of waves, wave-breaks and troughs as well-they know that real returns come from surfing these. They know that some stocks will emerge faster and more forcefully, and will go higher than others.

So: Which Stocks?

It doesn't take a fortune-teller to get a fix on them. Much of it is actually quite rational and when put together as a portfolio of 10, a portfolio of hot stocks can actually be designed to suit a band of return expectations. With this in mind and under the assumption of a 'moderate' risk profile (say, 20 per cent plus return, without a devastating downside possibility), we have constituted a portfolio of 10 tide-outpacing stocks that could potentially enrich you-the investor.

In terms of sectoral allocation, the portfolio reflects current economic trends, be it the story of exports, core sector recovery or cyclic commodity upturns. Valuation logic has been used extensively too. As Manish Chokani, Director, Enam Securities, says, "Valuations look cheap even after the recent run up, since the markets are yet to reward new highs in profitability, and there is a strong case of re-rating of sectors where structural changes are visible." We have assumed a one-year investment horizon at the very least. So don't expect a quick buck, though we guess you won't complain if you encounter that chance as well.

ABB
This steady performer in power and automation technologies stands to gain from a transformation in India's power sector, spurred by the Electricity Bill 2001. The order books are already looking up. In 2002, ABB secured orders worth Rs 1,305 crore, up 20 per cent on 2001. "The current order book and the new order flows have been strong over the past six-to-seven quarters," says Kaushal Shah, Research Analyst, LKP Shares and Securities.

Balrampur Chini
The recent sugar cycle downturn saw several cooperative and private mills go bust. This has yielded a phase of consolidation, aided by regulatory changes that have spelt opportunities in ethanol utilisation and power co-generation. Balrampur, as an integrated company that stands out for its high-efficiency model, has widened its scope to the fullest. "The new business model will completely re-risk its earnings from the volatility witnessed in the sugar industry," says Ambreesh Baliga, Head (Research), Karvy Stock Broking.

Bharat Forge
As global outsourcing gathers pace, India's auto ancillary exports are set to boom. Bharat Forge is poised to reap the benefits of a high-quality, low-cost combination. The company, in export mode for three years now, has bagged two big contracts from China recently. As the Chinese orders get scaled up and a Toyota order gets underway, the company ought to prosper.

Dr Reddy's
This is a play on the massive generics pharma opportunity in the US. Dr Reddy's distinguishes itself not just for cost effectiveness, but also progress in drug research. Recent successes include the deals for Prozac, an anti-depressant, last year. It is hopeful of scoring an NDA (new drug application) on Amlodipine, soon. Though research remains a litigation-prone business, the company has a very strong ANDA pipeline, with over 12 approvals and another 18 expected in the next year or so.

Gujarat Ambuja
Construction activity has picked up and cement stocks have gained from the recent bout of consolidation as well. Gujarat Ambuja Cement, Grasim, and acc are the leading picks, of which the first is the most focused. Its operating margin, at 29 per cent, is the highest in the sector (per tonne, its operating profit is a healthy Rs 523). "Being the lowest cost producer, even a Rs 10 increase in realisation per bag would add substantially to the company's net profit," says Baliga.

Mphasis BFL
This is an infotech company that has a high exposure to the booming ITEs sector, which faces less risks than the IT sector, even if less intellectually glamorous. The company has been scaling up aggressively. Expect a good growth story to unfold as its plans kick in. "Mphasis is one of the better mid-cap companies from the IT sector," says Surendra Goel, it Analyst, Motilal Oswal Securities.

Reliance
India's biggest private sector company is not showing any signs of slowing down. The petrochemicals cycle is showing signs of an upturn, so the good results will get even better. Also, some of the heavy investments are likely to pay off over the next few years. Reliance's gas ambitions, for example. The power sector is another big play. The telecom business has overcome its starting crises as well. On the whole, this is a company that plans big, really big, and achieves big, really big.

SBI
Credit offtake is up, bad loans are down. Banking is back. And if you need a proxy for the impending economic recovery, this sector is it-the most attractive representative of which, going by the P/E ratios, is SBI. India's largest bank is getting its act together at last and, with gains in it-driven efficiency, could make rapid inroads into consumer finance. Its network remains enviously large. Other opportunities: insurance and mutual fund distribution.

TVS Motor
This two-wheeler player has not lost the momentum generated by Victor, which placed it amongst the market's front-revvers. The financial performance has been terrific and current efforts suggest that this is sustainable. It has invested about Rs 120 crore in its Mysore plant and has also expanded capacity at its Hosur plant. Capacity has been upped and it's ready to zoom.

Zee Telefilms
Surprised? In the satellite television arena, Zee has been knocked clear out of the TRP charts by Star Plus and others, while returns from its last cinema megahit have also tapered off. But look at the stock this way. The profits remain fat. And if the government's regulatory system kicks in (as defined by the Conditional Access System), it would go in its favour, reckon analysts. All this makes the valuation look attractive.