myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Showing posts with label consumer products.. Show all posts

Sunday, 7 July 2013

Consumer Stocks on my radar screen

Carlsberg
Guinness
Nestle
Dutch Lady
Hup Seng Industries
Padini
Zhulian

Carlsberg

ROE 64.08%
EPS CAGR 5 Yrs 19.5%
DY High 5.2% - Low 3.6%
D/E 0.02
Revenues Growing last 3 Years
Earnings Growing last 3 Years
LFY Revenues 1584.78 m
LFY Earnings 191.63 m
Gross Margin 36.26%
Market Cap RM 4353.85 m
Shares (m) 305.75
Per Share price RM 14.24
P/E 22.7
DCA Strong

Guinness

ROE 54.62%
EPS CAGR 5 Yrs 13%
DY High 7.1% - Low 4.1%
D/E 0.53
Revenues Growing last 3 Years
Earnings Growing last 3 Years
LFY Revenues 1623.69 m
LFY Earnings 207.40 m
Gross Margin 33.70%
Market Cap RM 5437.76 m
Shares (m) 302.10
Per Share price RM 18.00
P/E 26.2
DCA Strong

Nestle

ROE 67.27%
EPS CAGR 5 Yrs 11.6%
DY High 4.0% - Low 3.1%
D/E 0.13
Revenues Growing last 3 Years
Earnings Growing last 3 Years
LFY Revenues 4556.42 m
LFY Earnings 505.35 m
Gross Margin 34.09%
Market Cap RM 14,252.91 m
Shares (m) 234.50
Per Share price RM 60.78
P/E 28.2
DCA Strong

Dutch Lady

ROE 57.08%
EPS CAGR 5 Yrs 21.2%
DY High 6.3% - Low 3.6%
D/E 0.00
Revenues Growing last 3 Years
Earnings Growing last 3 Years
LFY Revenues 882.18 m
LFY Earnings 123.38 m
Gross Margin 58.18%
Market Cap RM 3101.44 m
Shares (m) 64
Per Share price RM 48.46
P/E 25.1
DCA Strong

Hup Seng Industries

ROE 21.24%
EPS CAGR 5 Yrs 46.9%
DY High 11.0% - Low 7.3%
D/E 0.00
Revenues Growing last 3 Years
Earnings Growing last 3 Years
LFY Revenues 247.82 m
LFY Earnings 32.54 m
Gross Margin 35.47%
Market Cap RM 414.00 m
Shares (m) 120.00
Per Share price RM 3.45
P/E 12.7

Padini

ROE 28.23%
EPS CAGR 5 Yrs 25%
DY High 4.9% - Low 2.9%
D/E 0.15
Revenues Growing last 3 Years
Earnings Growing last 3 Years
LFY Revenues 723.41 m
LFY Earnings 96.00 m
Gross Margin 48.19%
Market Cap RM 1236.87 m
Shares (m) 657.91
Per Share price RM 1.88
P/E 12.9

Zhulian

ROE 25.91%
EPS CAGR 5 Yrs 14.7%
DY High 8.7% - Low 5.4%
D/E 0.00
Revenues Growing last 3 Years
Earnings Growing last 3 Years
LFY Revenues 450.43 m
LFY Earnings 117.09 m
Gross Margin 72.51%
Market Cap RM 1334.00 m
Shares (m) 460.00
Per Share price RM 2.90
P/E 11.4

DCA = durable competitive advantage

Friday, 22 June 2012

Investor's Checklist: Consumer Goods

Find companies that enjoy the cost advantages of manufacturing on a larger scale than most other competitors. One related issue is whether the firm holds dominant market share in its categories.

Look for the firms that consistently launch successful new products - all the better if the firm is first to market with these innovations.

Check to see if the company is supporting its brand with consistent advertising. If the firm constantly promotes its products with sale prices, it's depleting brand equity and just milking the brand for shorter-term gain.

Examine how well the firm is handling operating costs. Occasional restructuring can help squeeze out efficiency gains and lower costs, but if the firm is regularly incurring restructuring costs and relying solely on this cost-cutting tactic to boost its business, tread carefully.

Because these mature firms generate so much free cash flow, it's important to make sure management is using it wisely. How much of the cash is turned over to shareholders in the form of dividends or share repurchase agreements?

Keep in mind that investors may bid up a consumer goods stock during economic downturns, making the shares pricey relative to its fair value. Look for buying opportunities when shares trade with a 20 percent to 30 percent margin of safety.

Ref: The Five Rules for Successful Stock Investing by Pat Dorsey

Read also:
Investor's Checklist: A Guided Tour of the Market...

Friday, 19 March 2010

Searching for good quality stocks in the Consumer Sector

Let us have a look at some consumer stocks. I have selected these stocks based on their doubling in their earnings over the 10 year period of 1999 to 2009.

Here are these stocks:

Ajinomoto

BAT

Bonia

DLady

F&N
Mamee

Nestle

Padini

PPB

UMW

Subjecting the above to a further screening criteria (that is, no decline of >5% in earnings in 2 out of these 10 years), the following stocks are discarded from this list:

Ajinomoto
Mamee

UMW

Also, BAT is also discarded as the earnings growth the last 5 years had been negligible or anaemic at best.

This leaves the following stocks, with history of durable competitive advantage, in this list for further analysis.

~~Ajinomoto~~

~~BAT~~

Bonia

DLady

F&N
~~Mamee~~

Nestle

Padini

PPB

~~UMW~~

CONSUMER STOCKS 19.3.2010 (SCREENING)
http://spreadsheets.google.com/pub?key=tK8cE26-xL_RzQTlyraa4Hw&output=html

More data on these selected stocks:
http://spreadsheets.google.com/pub?key=t3NqvCaYIzbDefaasjB3ilQ&output=html

Which 1 or 2 of the above stocks would you wish to own for the long term?

Time for QVM analysis when time permits..

Wednesday, 27 January 2010

The Economic Climate (8): Cold Climates and Recession

Reviewing the recessions in US since World War II to 1995: all last an average of 11 months, and cause an average of 1.62 million people to lose their jobs.

In a recession, business goes from bad to terrible.

Companies that sell soft drinks, hamburgers, medicines - things that people either cannot do without or can easily afford - can sail through a recession unscathed.

Companies that sell big-ticket items such as cars, refrigerators, and houses have serious problems in recessions. They can lose millions, or even billions, of dollars, and unless they have enough money in the bank to tide them over, they face the prospect of going bankrupt.

Many investors have learned to "recession-proof" their portfolios.

They buy stocks only in McDonald's, Coca-Cola, or Johnson & Johnson, and other such "consumer growth" companies that tend to do well in cold climates.
They ignore the likes of General Motors, Reynolds Metals, or U.S. Home Corp. These are examples of "cyclical" companies that suffer in cold climates.

Cyclical companies either

sell expensive products,
make parts for expensive products, or
produce the raw materials used in expensive products.

In recessions, consumers stop buying expensive products.

My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Sunday, 7 July 2013

Consumer Stocks on my radar screen

Friday, 22 June 2012

Investor's Checklist: Consumer Goods

Friday, 19 March 2010

Searching for good quality stocks in the Consumer Sector

Wednesday, 27 January 2010

The Economic Climate (8): Cold Climates and Recession

All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

Political and Economic News

Interesting Blogs