Stock prices continued their heavy falls this weak, with the STI even breaching below 3300 momentarily yesterday.
But in contrast, the quarterly reports that have been released recently have continued to show strong earnings growth. Taking cue from the positive growth displayed by some of the leading large cap companies last week (here), many small to mid cap companies have displayed similar strong growth.
In fact, just to prove how good the earnings growth were, I will just name the companies which registered triple-digit growth:
- Sihuan saw its earnings rise 147%
- AdvSCT saw its earnings rise 277%
- Kim Eng saw its earnings rise 324%
- Rotary saw its earnings rise 109%
- SGX saw its earnings rise 184%
- AdvHdg saw its earnings rise 250%
- Fibrechem saw its earnings rise 142%
- Jishan saw its earnings rise 220%
That is a FACT, and not an opinion.
Which is why I continue to hold on to my stocks because I believe that come the end of the year, they will surely be worth much more than they are today.
Which is why I am slowly starting to take note of the stocks worth buying. I am sure many of us would like to know what stocks I think are worth buying.
I will gradually place the stocks on my "Stock Alerts" as we go along, but one thing I want to say is:
Since the the recent correction has brought prices down for many stocks below their value and close to their 200 DMA, I personally think that it is pointless to buy speculative pennies at this point when fundamentally strong stocks can offer good upside at limited downside.
Personally, I am interested in averaging in on my existing holdings, and to get more exposure to larger cap stocks.
I wouldn't bother even looking at stocks like Jade or FHTK or Hengxin.
To quote a shopping analogy:
Why shop at discount stores when Louis Vuitton is on sale?
5 comments:
I agree completely with your assessment. The problem is that this time round - the trigger for the correction is a problem that may result in global liquidity crunch which in turn affects how much profit these businesses can turn in. The stockmarket always looks forward and never to historical results. I started investing in 1999 and I experienced the bear market of 2001-3. Initially in 2001 - most of the companies still posted great results and gave superb dividends but as the bear dragged on - lots of companies went belly up or had their profits slashed - which in turn led to declining stock prices/dividends.
For now - I don't think the subprime mortgage issues are large enough to cause a global collapse, but I think you have to be cautious going forward bargain hunting. Drops are often precipituous, but the steady climb upwards will take weeks/months. I prefer to forgo the 10% and wait for a clear trend before re-entering the market.
I completely agree with your post.. during this market correction, i have load up many strong FA stocks. Its like a sale, or even a big lelong at pasar malam for these stocks... Jiayou with your investment!!
This is the huge debate going on right now I think: financial markets in turmoil but underlying corporate earnings still strong so what's next?
As anonymous said, corporate earnings may be at it's best, then it may be a 2-3yr long drawn bleeding.
However, global economy is still very strong, driven by growth in emerging markets, so not sure what will happen.
But one thing for sure, the market is a lot frothier than say 2-3yrs ago. A lot of punters, uncles, aunties are in the market. Multiples are also so-so, not cheap, but not ex. It's dangerous times I would say...
This is the huge debate going on right now I think: financial markets in turmoil but underlying corporate earnings still strong so what's next?
As anonymous said, corporate earnings may be at it's best, then it may be a 2-3yr long drawn bleeding.
However, global economy is still very strong, driven by growth in emerging markets, so not sure what will happen.
But one thing for sure, the market is a lot frothier than say 2-3yrs ago. A lot of punters, uncles, aunties are in the market. Multiples are also so-so, not cheap, but not ex. It's dangerous times I would say...
Exactly. Therefore it may be wiser to forgo some profit then to get yourself stuck in at the moment. Even if it means keeping it locked up in a FD garnering 2% interest ....
Post a Comment