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Value Stocks In Singapore

Value Stocks In Singapore

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Singaporeans often ask what are the value stocks in Singapore. This explains why Value Investing education in Singapore is getting more and more popular and. Like many retail stock investors, many Singaporean investors got burnt in stock market in one way or another. These investors  simply don’t carefully weigh their stock-investment decisions or solely rely on analysts’ report or market news.

As stock market crashes have taught us, a carefree investing style doesn’t work forever. In fact, its success usually comes to an abrupt end. It would be such investors to relearn that painful lesson before the next crash. With that in mind, there are 8 value investing questions investors should ask and answer before buying a stock. Of course, knowing all the answers doesn’t guarantee a winning stock. Nothing or no one can possibly do that. But over the long haul, taking the time to consider these questions will make one a better, more well-informed investor to get value stocks.

8 Value Stocks Investing Questions

 

1. What Is Exactly The Nature of Business?

Warren Buffett  said before that he doesn’t invest in what he doesn’t understand. If the greatest value investing guru of the past 60 years  acknowledge that he doesn’t understand all companies, we should all probably take his advice into consideration. This first basic question is a simple one, but that doesn’t mean it’s easy. To answer the question, there are plenty of places to look out for information, including security exchange, e.g. SGX or the company’s website.

2. Who Are Managing the Company?

Retail investors don’t have the ability or avenues to drop by a company’s headquarters and chat up the management before making a stock investment decision. However, that doesn’t mean there aren’t plenty of ways to find out about the leadership. Any company worth of investment will have a Web site that lists the senior managers, how long they have been with the company, their background and the company’s history. If the management team of the company keep changing, that may not reflect positively on the company’s stability. Beyond the company line on the management team, value stocks investors should research articles about the owners and the management team. Often, trade publications from any given industry are useful to study the company.

3. Is the Company’s Competitive Position Sustainable?

In what ever business or industry, there is always bound to have competitions in one way or another. Some sectors are highly competitive while others could be monopoly. Serious value investors do look out for such competitive edge before they invest into the company. Spectulative investors looking for short-term gains might not need to answer this question.

4. What Is the Company’s Earnings History and Outlook?

A quick scan of older news stories and the company’s past quarterly statements help answer this question. Does the company have a history of steady earnings growth? Are earnings volatile? Remember, all trees don’t grow to heaven: If the company is a maturing tech company, can it sustain the heady growth of its days as a young growth company? Remember the lesson of Nokia being a market leader in mobile phones being replaced by Apple and Samsung for their better smart phones. Or say in the local Singapore context, companies such as Creative Technology no longer command the leadership it used to have in the past.

5. Is the Company Profitable? 

This is also a simple question, which can be made more complicated by all sorts of variations on a company’s earnings. Investors can read the annual earnings reports to check out how much net income the company reported, in dollars and in per-share earnings. The usual analysis will be more meaningful if the net profit margin can be compared over a span of ten years to check on its consistency.

 

6. How to determine A Value Stock?

It’s wonderful to find a growth company whose earnings are growing exponentially, but the other hand, we need to checks the value the market pays for that growth and the prospect of future growth. There are several basic methods of determining a company’s valuation, including price to earnings and price to earnings growth rate. Price-to-earnings, or P/E, multiples aren’t the perfect gauge, but investors do need to consider such factors to determine how much should they be paying for a stock.

7. How Strong Is the Company’s Balance Sheet?

Value investors need to be able to read over a company’s balance sheet. Is the company owns a huge amount of debt compared with how much it earns? Checking out a company’s earnings alone doesn’t tell you if the company has borrowed to achieve those earnings. It’s also useful to see how much the company is spending on research and development and how large its inventory levels are. As far as Warren Buffett or some value investing gurus are concerned, they might want to skip such companies that overly spend their research and development budgets before their earnings can cover such cost as this will bring higher risks of running the business.

8. Who Are the Company’s Competitors?

Companies don’t operate in a vacuum. Companies are constantly trying to take business from one another. Take for example Samsung and Apple. They are constantly fighting for the market share of smart phones. Investors should know where their companies stack up.Does this company have the biggest market share in its industry? Is it a small but growing niche player in a competitive industry? Is it an industry dominated by one company, or is it a fragmented industry where even the biggest player controls less than 10% of the market — such as in the supermarket business? Also, investors should increasingly pay attention to foreign competition, where lower-cost competition can put pressure on profit margins.

 

In the past, I used to spend a lot of time reading information from internet about the financial health or reports of the companies that I wanted to invest in. But now, I have a proven value investing system which can allow you to systematically check up upon a particular listed company be it locally or overseas using value investing principles. This is not just to uncover a undervalued company to invest in but at the right time to buy such value stocks. If you would like to know more value investing, we suggest you take actions to attend such free value investing seminars so as to better educate yourself before you bungee jump into any stock market.

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