In my investment i have 3 classes of stocks. These are:
1. fundamental ... stocks that are under valued.
2. turnaround stocks ... companies turning around from looses to profit
3. situational.
Fundamental stocks
For fundamental, p/e play a big part and my holding for these stocks can be
for as long as the profit is growing and is not over priced, meaning, the p/e is not too high. A comfortable p/e for me is ... stocks trading below a p/e of 10. This p/e of 10 is arbitrary as different sector commands different p/e, example ... health care sector.
Current stocks that i am holding that fit into this category of p/e below 10 are Excelpoint and Chasen with respective p/e of 6.7X and 4.7X. I have been vested in Excelpoint as early as 2012 due to its low p/e, earning growth and high dividend. Dividends collected over the past years have more or less paid for my investment. Chasen was a later entry with a turnaround story. However the top and bottom lines have been holding up very well and the turnaround story has evolved into value play or fundamental.
Turnaround stocks
Turnaround stocks ... normally i ignore the p/e as in most cases they have negative p/e. The concerns are ... can it turn around, will it go bankrupt, will it have further growth after turning around. Normally after the turnaround i will evaluate its value and decide whether i should hold or to sell off. A case in point is Chasen and JEP Holding. After both companies turned around i sold off JEP Holding as i felt that the p/e was too high whereas i held on to Chasen as the p/e was within my level of comfort.
Situational stocks.
This refers to certain situations when the price of a good stock fall dramatically due to certain situations/events. One example is the recent oil crisis in 2014. In that year Keppel fell to a low of S$4.64, OCBC went below $8, Sembcorp came all the way to S$2.16. I took positions in these stocks and subsequently sold them off after holding for about a year.
Conclusion.
In conclusion, i am a bottom up investor. I look at the business of a company through its bottomline. I avoid what i do not understand. My holding period depends on the reason for my entry ... fundamental, turnaround or situational. As a bottom up investor, i am not particular about the sector so long as the company can produce improved results.
Please note that different people have different investment styles.Some go for growth which normally have very high p/e. Some go for cyclicals. Some based on technical analysis etc etc. What I share w you is my personal approach to the market and its not necessarily the right way. However it has served me well in the past 25 years.
Thank you Joseph for the detailed explanation. Investment is truly an art that requires loads of wisdom sharpened through experience. There’s a lot of gems in what you shared. Thank you. Will take time to digest and apply the principles shared.
Chasen has just declared a dividend of $0.003 per share.
This 3 times higher than last year of $0.001. Based on
today's closing price of 7cts, the dividend yield is 4.28%
