Monday, December 22, 2008
Buy Genting International
Genting Int is a hard rock solid FA stock in long term ! its liecense itself worth more than 0.50 ! no need to chase at current level.. buy bit by bit n in stages , keep it under yr pillow 4 yr childs..
Y choosed Genting int instead of genting ? simple..cos i like small knife cut big tree ! @ 0.40+- ..d downside limit is very minimum..worst come to worst is only 0.30+- ! as for genting .. dont 4get it has been split .. if u times back.. it is now more than 10.00 lah...
Just like resorts , if u times 2.20 with 5 = RM11.00 ! 2 those aunties n uncles ( they dont know what is PE , they count by dollar n cents not by value ), 2.00+ for them is not expensive ..but if u ask them to buy stock >10.00.. they will tell u it is damn expensive.
that's y i said..genting int @ 0.40 is quite a safe bet .. cos its down side limit is very minimum !
Y choosed Genting int instead of genting ? simple..cos i like small knife cut big tree ! @ 0.40+- ..d downside limit is very minimum..worst come to worst is only 0.30+- ! as for genting .. dont 4get it has been split .. if u times back.. it is now more than 10.00 lah...
Just like resorts , if u times 2.20 with 5 = RM11.00 ! 2 those aunties n uncles ( they dont know what is PE , they count by dollar n cents not by value ), 2.00+ for them is not expensive ..but if u ask them to buy stock >10.00.. they will tell u it is damn expensive.
that's y i said..genting int @ 0.40 is quite a safe bet .. cos its down side limit is very minimum !
Tuesday, May 20, 2008
What type of stocks should I buy given the present uncertainty on the stock market’s future direction?
It is always very difficult to determine whether we’ve seen the worst or if it is still in a situation pending a major market correction. Although there are a lot of uncertainties over the market’s future, we can still invest if we are able to find stocks paying good dividend yields.
According to Benjamin Graham and David Dodd in their book, Security Analysis, the price paid for a stock would be determined chiefly by the amount of the dividend paid. A good company should pay dividends. This is one of the best ways to reward shareholders. Besides, we always believe a bird in hand is worth two in the bush.
Stocks paying good dividends will provide us with a “floor” if the market is undergoing a correction.
For example, Company A has a stable business and is paying a relatively fixed dividend of 32 sen a year. Its dividend yield (DY) will be equivalent to 5.3% based on the market price of RM6. This is quite attractive if we compare it with the current 12-month fixed deposit (FD) rate of 3.7%.
Assuming, as a result of a big market correction, its stock price tumbles to RM5, then its DY will surge to 6.4%. This will make Company A even more attractive compared with FD rates.
Certain investors may be worried whether Company A’s business will be affected by the slowdown in the overall economy. If its business is consumer-based with relatively stable demand, its sales and profits will be less affected by the economic slowdown.
Besides, as most companies are trying to maintain a fixed dividend payment, investors can still enjoy good dividend returns. Sometimes, the over-reaction to a market crash may be much greater than the drop in profits. This will give investors another great opportunity to buy the stock at a lower entry price. If investors are prepared to hold on to the stock over the next five to 10 years, a lower entry price will give us greater capital gain.
According to Benjamin Graham and David Dodd in their book, Security Analysis, the price paid for a stock would be determined chiefly by the amount of the dividend paid. A good company should pay dividends. This is one of the best ways to reward shareholders. Besides, we always believe a bird in hand is worth two in the bush.
Stocks paying good dividends will provide us with a “floor” if the market is undergoing a correction.
For example, Company A has a stable business and is paying a relatively fixed dividend of 32 sen a year. Its dividend yield (DY) will be equivalent to 5.3% based on the market price of RM6. This is quite attractive if we compare it with the current 12-month fixed deposit (FD) rate of 3.7%.
Assuming, as a result of a big market correction, its stock price tumbles to RM5, then its DY will surge to 6.4%. This will make Company A even more attractive compared with FD rates.
Certain investors may be worried whether Company A’s business will be affected by the slowdown in the overall economy. If its business is consumer-based with relatively stable demand, its sales and profits will be less affected by the economic slowdown.
Besides, as most companies are trying to maintain a fixed dividend payment, investors can still enjoy good dividend returns. Sometimes, the over-reaction to a market crash may be much greater than the drop in profits. This will give investors another great opportunity to buy the stock at a lower entry price. If investors are prepared to hold on to the stock over the next five to 10 years, a lower entry price will give us greater capital gain.
Sold masteel and swap to ONASTEL and hold HUAAN
I already sold masteel for 5 lot. Earn RM 1000. Recently, I had bought and swap to ONASTEL AND still keep HUAAN on my portfolio. Both steel counter, I am looking good of the world demand on steel in coming years.
Eyes will mark on the airasia with the current drop due to the high oil price in the global market. I believe that when oil become 150-200 USd and airline will get affect and hopefully it will reach 1.00.. will collect slowly on airasia 1.00..
Eyes will mark on the airasia with the current drop due to the high oil price in the global market. I believe that when oil become 150-200 USd and airline will get affect and hopefully it will reach 1.00.. will collect slowly on airasia 1.00..
Saturday, May 10, 2008
Systematic Way For Selection Counter
Even though there are no short cuts in screening stocks, we can broadly group our selection according to seven criteria, namely SGPDBHM. “S” stands for sales, “G” – growth, “P” – price-earnings ratio (PER), “D” – dividend yield, “B” – book value, “H” – health and “M” for management.
In this article, we will look at the first four criteria: sales (S), growth (G), PER (P) and dividend yield (D).
S – Annual sales of at least above RM500mil
Our first criterion is to select companies that have total annual sales of RM500mil and above. The main purpose for this is to select big companies for investment. Normally, a company with total sales of above RM500mil is considered well established and is less dependent on its owner.
In most instances, it will be one of the market leaders commanding a certain market share in its industry. Although we are not saying that companies with annual sales of less than RM500mil are not good for investment, less established companies face stiffer competition and have more uncertainties in their future compared with more established companies.This explains why the majority of our research houses prefer big companies to small companies.
At present, if you are holding shares in a lot of small companies (although they have good fundamentals), the majority of them are not performing in terms of stock prices despite the current high stock market valuations.This may be due to the same worries as well as analysts not paying much attention to those stocks.
G - growth in sales
We need to select stocks with strong sales growth. Higher growth in sales implies that a company is expanding fast.
According to Benjamin Graham in his book entitled “Security Analysis”, a growth company’s business can move faster than its stock price. Given that our returns depend only on capital gain or dividend income, if a stock never pays any dividend, we need to make sure that we can get capital gains from the stock. Unless we are able to catch them at cheap prices, we need to make sure that the company has very strong sales growth.Higher sales will contribute to higher profits and higher stock prices.
P - Low PER stocks
To get a high margin of safety (MOS), we need to find stocks with low PER. For a stock that has a PER of 20 times, you would need to wait 20 years to get back your money, assuming that it can achieve the same earnings per share (EPS) over the next 20 years.
Hence, we should select stocks with low PER, especially lower than the overall stock market or its own industry average. Given that the current market PER is about 15 times, if you can find a stock that is selling lower than 15 times, we can say that it is selling at a cheaper valuation than that of the overall market.
D- dividend yield of at least equal to fixed deposit rate
A good company needs to pay dividend. We believe this is the best way to rewards shareholders.There are some listed companies that are making good profits but refuse to reward their shareholders with high dividends as they claim that they need to retain the profits for future expansion.
However, we believe “a bird in the hand is worth two in the bush”.There are cases where companies are able to generate good returns from every dollar that they retain, but in most cases, some fail in their expansion programmes. To retail investors, there are too many uncertainties over returns from these investments.We believe that companies that are unable to reward their shareholders with good dividend need to reward them with higher stock prices.
According to Warren Buffett, this is called the one-dollar premise, whereby every dollar that the company retains needs to translate into one dollar in stock price. Given the present weak stock market, if a company is able to provide a dividend yield that is equal to the fixed deposit rate of 3.7% will attract investors to put their money into their stock instead of in the bank.
In this article, we will look at the first four criteria: sales (S), growth (G), PER (P) and dividend yield (D).
S – Annual sales of at least above RM500mil
Our first criterion is to select companies that have total annual sales of RM500mil and above. The main purpose for this is to select big companies for investment. Normally, a company with total sales of above RM500mil is considered well established and is less dependent on its owner.
In most instances, it will be one of the market leaders commanding a certain market share in its industry. Although we are not saying that companies with annual sales of less than RM500mil are not good for investment, less established companies face stiffer competition and have more uncertainties in their future compared with more established companies.This explains why the majority of our research houses prefer big companies to small companies.
At present, if you are holding shares in a lot of small companies (although they have good fundamentals), the majority of them are not performing in terms of stock prices despite the current high stock market valuations.This may be due to the same worries as well as analysts not paying much attention to those stocks.
G - growth in sales
We need to select stocks with strong sales growth. Higher growth in sales implies that a company is expanding fast.
According to Benjamin Graham in his book entitled “Security Analysis”, a growth company’s business can move faster than its stock price. Given that our returns depend only on capital gain or dividend income, if a stock never pays any dividend, we need to make sure that we can get capital gains from the stock. Unless we are able to catch them at cheap prices, we need to make sure that the company has very strong sales growth.Higher sales will contribute to higher profits and higher stock prices.
P - Low PER stocks
To get a high margin of safety (MOS), we need to find stocks with low PER. For a stock that has a PER of 20 times, you would need to wait 20 years to get back your money, assuming that it can achieve the same earnings per share (EPS) over the next 20 years.
Hence, we should select stocks with low PER, especially lower than the overall stock market or its own industry average. Given that the current market PER is about 15 times, if you can find a stock that is selling lower than 15 times, we can say that it is selling at a cheaper valuation than that of the overall market.
D- dividend yield of at least equal to fixed deposit rate
A good company needs to pay dividend. We believe this is the best way to rewards shareholders.There are some listed companies that are making good profits but refuse to reward their shareholders with high dividends as they claim that they need to retain the profits for future expansion.
However, we believe “a bird in the hand is worth two in the bush”.There are cases where companies are able to generate good returns from every dollar that they retain, but in most cases, some fail in their expansion programmes. To retail investors, there are too many uncertainties over returns from these investments.We believe that companies that are unable to reward their shareholders with good dividend need to reward them with higher stock prices.
According to Warren Buffett, this is called the one-dollar premise, whereby every dollar that the company retains needs to translate into one dollar in stock price. Given the present weak stock market, if a company is able to provide a dividend yield that is equal to the fixed deposit rate of 3.7% will attract investors to put their money into their stock instead of in the bank.
Friday, May 9, 2008
Lesson On PE
If u invested one dollar in stock x, n this stock x giving u EPS of 10cts ( 1/0.10 = PE 10 ), this means it needs 10 years for u to gain back yr capital of one dollar ^V^In short PE 10 means u need 10 years to recover yr capital
PE 20 means u need 20 years to recover yr capital
Now calculate yrself, if stock x traded at PE 3 , answer me, what is d FD rate for PE 3 ? n u need how many years to recover yr capital ?
If u can answer that.. this show u r HALF understand d magic key of PE !
I am not saying stock with PE < 10 will definitely profit u ! but !!! at least u know what u r buying n u wont over pay for what u bought ^V^ No matter how, u still hv to take some risk even stocks that u bought r all below PE 10, everybody know how to buy LOW PE stock, but not everyone able to catch low PE stock with sustainable future earning ( here i am talking about sustainability of its future earning, of course if her earning jumped above yr forecast is even better ). D key success here is "Future earning "
ExampleStock X Share price = 1.50 EPS for 2 qtrs = 15.64Let presume that stock X managed to maintain such a good earning for d coming 2 qtrs , hence, 15.64cts x 2 = 31.28 cts for year 08 ^V^If my forecasting turn to be good, 31.28 cts will translate its PE to 4.7 (21% return per year)with current price of 1.50, let assume d PE for its industry stood at 13+-, its fair value should be 13 x 31.28 = RM 4 + ! even PE 10 will still give u fair value of 3.10+ ^V^D above r with d assumption that its future earning rose in line with u hv forecasted ^V^
What happen IF >>>>
What happen if d coming 2 qtrs turn to be an lousy one, presuming she running at huge loss with negative EPS of 30cts !??let calculate again..first 2qtrs EPS = 31.28, d other 2 qtrs giving u -0.30cts
D whole year EPS is now 31.28 - 0.30 = 1.28ctsyr PE is now 1.50/ 1.28 x 100 = 117 !!! what is PE 117 stand for ?PE 117 stand for 0.85 % return per year or u needs 117 years to recover what u hv invested ! (why buying such stock that giving u return of 0.8% if u can enjoy FD rate of 6.6 % with zero risk !??)See ? future earning will determine d movement of yr share price ^V^That's d reason y I will not buy in any penny stock with PE > 15 n blue chip @ PE>20 !
How to minimise yr risk from wrong picking ?2 ways :
1)Track earning recordsIts 3 to 5 years track earning records : check d earning track records for stock like PBB, YTL , BAT , Maxis, IOI.... NO losses at all for past 10 years !! That's y i always ask u ppl to follow those with track proven results blogger ..ha ha
2)What is on going now n years to come example : We know 9mp is hot going n it will on going for another 2 to 3 years time, Mega projects need steel (http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_6f4bdce6-cb73c03a-6798eb00-5043bd24 ) , cement, timber n ..... from here I know n confident that d coming 2 qtrs earning for masteel n onastel r definitely sustainable ^V^ hence, their coming earning will definitely in line with what i hv forecasted .
PE 20 means u need 20 years to recover yr capital
Now calculate yrself, if stock x traded at PE 3 , answer me, what is d FD rate for PE 3 ? n u need how many years to recover yr capital ?
If u can answer that.. this show u r HALF understand d magic key of PE !
I am not saying stock with PE < 10 will definitely profit u ! but !!! at least u know what u r buying n u wont over pay for what u bought ^V^ No matter how, u still hv to take some risk even stocks that u bought r all below PE 10, everybody know how to buy LOW PE stock, but not everyone able to catch low PE stock with sustainable future earning ( here i am talking about sustainability of its future earning, of course if her earning jumped above yr forecast is even better ). D key success here is "Future earning "
ExampleStock X Share price = 1.50 EPS for 2 qtrs = 15.64Let presume that stock X managed to maintain such a good earning for d coming 2 qtrs , hence, 15.64cts x 2 = 31.28 cts for year 08 ^V^If my forecasting turn to be good, 31.28 cts will translate its PE to 4.7 (21% return per year)with current price of 1.50, let assume d PE for its industry stood at 13+-, its fair value should be 13 x 31.28 = RM 4 + ! even PE 10 will still give u fair value of 3.10+ ^V^D above r with d assumption that its future earning rose in line with u hv forecasted ^V^
What happen IF >>>>
What happen if d coming 2 qtrs turn to be an lousy one, presuming she running at huge loss with negative EPS of 30cts !??let calculate again..first 2qtrs EPS = 31.28, d other 2 qtrs giving u -0.30cts
D whole year EPS is now 31.28 - 0.30 = 1.28ctsyr PE is now 1.50/ 1.28 x 100 = 117 !!! what is PE 117 stand for ?PE 117 stand for 0.85 % return per year or u needs 117 years to recover what u hv invested ! (why buying such stock that giving u return of 0.8% if u can enjoy FD rate of 6.6 % with zero risk !??)See ? future earning will determine d movement of yr share price ^V^That's d reason y I will not buy in any penny stock with PE > 15 n blue chip @ PE>20 !
How to minimise yr risk from wrong picking ?2 ways :
1)Track earning recordsIts 3 to 5 years track earning records : check d earning track records for stock like PBB, YTL , BAT , Maxis, IOI.... NO losses at all for past 10 years !! That's y i always ask u ppl to follow those with track proven results blogger ..ha ha
2)What is on going now n years to come example : We know 9mp is hot going n it will on going for another 2 to 3 years time, Mega projects need steel (http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_6f4bdce6-cb73c03a-6798eb00-5043bd24 ) , cement, timber n ..... from here I know n confident that d coming 2 qtrs earning for masteel n onastel r definitely sustainable ^V^ hence, their coming earning will definitely in line with what i hv forecasted .
Masteel and Huaan 1.75 and 0.79
When come to which counter to put yr money on ? volume plays an important role ^V^.. d current theme now is commodities, steel counters r hot cooking, look at ssteel n its latest QE !
Masteel already moved..huaan volume getting bigger n bigger !from d results of ssteel, we can see that all steel counters will produce good results in d coming qe, huaan n masteel 's qe will be out by this month , what do u see from here ? ha ha..yr guess is as good as mine ^V^
Huaan..low PE, zero debt , cask kow , IPO 1.00 n it is a red chip counter. by crook or by hook..i am confident it will climb above 1.00 in time 2 come.
Masteel already moved..huaan volume getting bigger n bigger !from d results of ssteel, we can see that all steel counters will produce good results in d coming qe, huaan n masteel 's qe will be out by this month , what do u see from here ? ha ha..yr guess is as good as mine ^V^
Huaan..low PE, zero debt , cask kow , IPO 1.00 n it is a red chip counter. by crook or by hook..i am confident it will climb above 1.00 in time 2 come.
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