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Saturday, February 14, 2015

Newbie Quetions how to buy cheap stock?

As I continue to guide someone that is new to stock market, here are his questions.

Please read my newbie topic for introduction.

Newbie: I'm buying XREIT, key in GTD for 2 weeks.

Me: At what price?

Newbie: RMX.xx Good?

Me: Not sure. Have to check. REIT is slow type. For info only. They buy property and lent out. Just curious, why Xreit?

Newbie: I went to research paper, look at the stock price target and select the lowest price target. Then I go each of them to check their profit, dividend yield and PE ratio. After that I compare them with a few research report. Reliable or not if the comments are the same then I am confident to buy? And I also read up a bit on their background sometimes.

Me: You rule out lowest target price, means you select high target price?

Newbie: Select lowest price target

Me: Why select lowest price target?

Newbie: Because can buy more lots of lower target price right?

Me: No !!!! You should select high target price percentage if you want to filter based on price target.  STOCK A Price RM1.00, target peice RM1.50 (50% upside). STOCK B RM2.00, target price RM5.00 (150% upside).  Buy which one?

Newbie: Buy STOCK A, becuase is cheap.

Me: No !!!  Should buy STOCK B.  If you have RM10,000 you buy 10000 STOCK A. After 1 year STOCK A price RM1.50, you make RM5,000.   If you use the RM10,000 to buy 5000 STOCK B, after 1 the price is RM5.00,  you make RM15,000.

Newbie: Oh I see.

Me: Cheap or not cheap is look at the PE Ratio, the lower the cheaper. Not just looking at the stock current price. The stock target price is the potential price that analysts forecast. The higher the upside percentage, the better.

Newbie: I didn't know.

Me: It is not wrong for you to buy Xreit, but the reason of buying must be right. Do you want to rethink or reconsider?

Newbie: Yes. But I already GTD for 2 weeks. Can cancel?

Me: Can.

Newbie:  Okay. I cancelled it already. Thanks for the info.

Me: Ok.


The communication above reminds me of one madam 13 years ago. She told me SHELL stock is cheaper that ESSO because Shell is RM2, ESSO is RM3. Worth to buy Shell, better than ESSO. I can't remember the exact price or the range. But the thing is, she just purely based on price.

Imaging now you say Maybank is cheaper than PBBank, because Maybank is RM10 and PBBank is RM18. Better buy Maybank, cheaper, better than PBBank.

Then tomorrow PBBank ex for bonus one for one, price become RM9. And after 24 hours you suddenly change, say now PBBank is cheaper, worth to buy, better than Maybank.

If the lower the price the cheaper, then everyone no need research report, just open up newspaper or on your online trading screen, buy everything on those RM0.005 or RM0.01.

Look at PE Ratio, not just price. Of course, other factors also important.

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Sunday, January 25, 2015

Is Harbour stock going to fly?

Look at the Harbour stock prices, is this stock going to fly? Early this year the share price was below RM1.40, low about RM1.35. Then from RM1.38 up 15% to RM1.59 within a day. The few days later hit RM1.63 and then the next day dropped 9% to RM1.48. Untraded for a day and hit RM1.62.

Why? Maybe got people want to buy with huge quantity? Gradually got buyer que at higher and higher bid. Is this the same group of people? Because suddenly one day all buyers at high price were gone, resulted in price dropped to RM1.48.

Or could it be someone just want to buy 100,000 shares and that's all? Past two weeks volume less than 100,000 shares. If the trades completed, then the buying will be stopped and price may drop.

This stock very illiquid. Really don't know what is happening. Maybe due to lack of buyer and seller, causing the price to fluctuate greatly.

Why am i looking at this stock? Saw one broker recommend to buy, saying Harbaour target price is RM2.20. But hard to buy because very illiquid. Maybe really have to que. Someone bought it at RM1.40 after que for few days.

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Tuesday, January 20, 2015

HHGROUP share price

According to Kenanga, Pioneer in biomass manufacturing industry. Heng Huat (“HH”) is an integrated manufacturer of coconut and oil palm biomass & valueadded products since 2007 and currently commands the lion's market share (c.47%) in the biomass materials industry. Segmental-wise, the biggest earnings' contributor is Palm Fibre segment (62% of the group’s gross profit in FY13), followed by the Mattress & Related product (20%), Coconut Fibre (16%) and Briquette (2%).

Kenanga said.....  Trading Buy at RM0.51/share. HH is currently trading at an undemanding FY15E PER of 6.4x (vs. the FBMSmall Cap fwd PER of 9.2x). Assuming a 10% discount (as a result of its smaller market cap) to the benchmark small cap index fwd PER, we derived a fair value for HH at RM0.51, based on targeted FY15E PER of 8.2x.

They said. .. . . . HHGROUP stock has no formal divided policy but management intends to distribute 20% of its annual net profit as dividend to reward its shareholders. Based on our targeted FY14E net profit of RM10.2m, we expect the group to declare 1.0 sen as dividend, translating into 2.5% dividend yield.

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