Adding more stocks to portfolio
Investors are treading very cautiously amid the rout in emerging markets and currencies.
The FBM KLCI is holding up but trading is subdued. Foreigners have been net sellers in the local stock market every week in November and net foreign inflow is now back in the red for the year to date.
I suspect selling pressure will remain in the near to medium term.
Nevertheless, I am adding to my portfolio. This week, I acquired 30,000 shares in Mikro MSC (at 47 sen per share) and buying back 4,000 Classic Scenic shares at slightly lower price of RM1.72. The purchases reduced my cash holdings to about 62% of total portfolio value.
I believe that foreign ownerships in both stocks are minimal. More importantly, I’m upbeat on their underlying businesses and prospects.
Mikro designs and manufactures electrical distribution products — such as protection relays, metering solutions and power factor regulators — that are essential and widely used in factories, commercial buildings, shopping malls, airports, hospitals, and so on. You can read more about this company in InsiderAsia’s latest report available on www.absolutelystocks.com.
I have held shares in Classic for some time now, though I did pare my holdings in September. The company continues to do well in its latest 3Q2016 earnings results. This is a high-yielding stock — estimate at around 6.8% — with sustainable business and good margins. Almost all sales are derived from exports, denominated in the US dollar.
Last week, I included two tables showing companies with the strongest and weakest Fundamental scores. This week, I’m attaching two similar tables showing companies with the highest and lowest Valuation scores. To recap, the Valuation score is a composite of financial metrics that tells us the attractiveness of a stock in terms of valuations.
A quick search through AbsolutelyStocks’ data shows there are currently 19 companies with Valuation score of 3 and 37 stocks with 0 score. Due to space constraints, the tables shown on this page are limited to 16 companies for each. But the difference between the financials for the two is quite clear.
Ideally, we would pick stocks with the strongest Fundamental score and highest Valuation score. In reality, there would usually be some trade-off.
Mikro has a Fundamental score of 2.55 and Valuation score of 2.10 out of the maximum of 3. Meanwhile, Classic has 3.00 and 1.70 for Fundamental and Valuation scores, respectively.
Again, a reminder, scores can change with daily price movements and each release of the latest financial information. So, keep yourself updated.
My total portfolio returns now stand at 26.7% since inception. I continue to outperform the FBM KLCI, which is down 11.1% over the same period, by some distance.
Source The Edge weekly
