continuing...
Since we know d avg FD rate is around 6.6 % or equivalent to PE 15 , this given us a guide to weigh how value buy the stocks u intended to buy r ^V^ theorititally no one wanted to buy stock with PE > 15 cos it given u return per annum less than 6.6%, why should u invest in something which is lower than avg FD rate ? further more , putting yr money in FD is zero risk as compared to putting yr money in stock (PE >15) that giving u annual return less than 6.6% !?
Take yrself as a biz man, if u want 2 buy up a biz, which company u prefer ? company with annual return more than avg FD rate or company return less than avg FD ? if less tha avg FD , why should u buy ? might as well put yr money in FD that given u zero risk ?? now u know why i said stock with PE stood around 5+ like masteel, onastel n plenitude r germ of d germs $$$$ !
R all d stocks with PE > 15 r lousy buy ? NOPE ! different industry has different PE. Banking (MBB, PBB ), gaming (Genting, resort, bjtoto ) n monopoly biz ( Tenaga, TM,Maxis, digi, Plus)usually having higher PE than others, they r not going to sell u their biz less than FD rate or PE at 15 ! that is for sure ! if u want to know why ? perhaps u should ask those who bought PBB, Genting, MBB , YTL 20 years ago n still holding till todate, ask them how much they hv profited from them ? FYI, they will not getting less than 15% return PER ANNUM !!! know what is 15% return equivalent to ? it is as same as PE 7 !! Hence, dont try to be smart n ask uncle lim to sell his Genting to u @ PE 15, he will definitely give u a right n left side kick on yr head or may be plus another twist kick on yr private part !
Conclusion, for safe play, unless it is a blue chip counter , otherwise, i will not buy any stock with PE > 15 for FA play ^V^
11 comments:
Dear Sam,
Wah so early morning you wake uncle lim to give us fly kick :P,
nice conclusion. When you talk about blue chips and pe for different industries what is the ? rules to determine their PE?
ha ha...very funny, uncle sam, i like yr blog very much ^_^ simple explaination but useful. twist kick on yr private part? ha ha
Dear Sam
simple ,straight to the point and yet good explanation---easily comprehend by all newbie like me....better than those fund managers/analysts of bushshiting here and there.
write more please.
team
sam, the differeces between yours & other blog is u posted it in yr blog with date of purchase & date of disposal, unlike others, talk only with no balls to post their picks before hand call. i like yr blog very much too , keep it up sam.
I thought 15% is equivalent to PE 100/15 = 6.67?
Can TONGHER be compared to MASTEEL/ORNASTEEL since they are of slightly different industry?
If yes, how would u compare TONGHER and MASTEEL/ORNASTEEL? Half year EPS = 50cts;
FY07 EPS maybe 51cts x 2 = 102cts.
PE = 650/102 = 6.5
Net cash position
30% of asset is cash in bank
Revenue growth 150%
Net Profit growth 270%
NTA RM3.09
Market price: RM6.50
of course tongher is another germ besides masteel, 2 qtrs giving u 51.38, 51.38 x 2 = 102.7, at current price of 6.50. 6.50/102.7 giving u PE of 6.3, even if US goes into recession, US is d biggest contribution to tongher, for her to maintain PE < 10 is not a problem, I choosed masteel, plenitude n onastel is bcos they r cheaper in dollar n cts as compared to tongher which cost me 6.50 per lot.
u r right, should be PE around 7 for return of 15 % , 1/7 x 100 ^V^ good call .
do u know how solid plenitude is interm of FA ? PE around 7, debt free , NTA 3.86 BUT !!! last valuation on its asset way back in year 2000, it should be at least >5.00 for its NTA based on current mkt price.
d average PE for property stock is around 13 to 15, Plenitude is d cheapest stock among all + debt free counter with NTA way above 5.00 ^V^ see d germ ?
Sam,
I am new to FA and I have lost to market many many times before because I am not skillful.
I think PE is quite important in FA as you have mentioned many times in your blog. Is there any other parameter that one should look at?
Thanks so much for advice. I wish to learn to be better.
Cheers
Mac
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