Stock Investing Basics V.2

advertisement
Presented by: Renzie Doem R. Agutaya
Summit Securities, Inc. - Bacolod
What is an investment?
 An asset or item purchased with the hope that it will
generate income or appreciate in price in the future
Example of investments are:
1. Real estate
2. Paintings
3. Antiques
4. Collectibles
5. Stocks
What is stocks?
Stocks are shares of ownership in a corporation.
When you buy stocks of a publicly listed company, you
become a part-owner of that company.
As an owner, you participate in that company’s growth
and future profits.
Conversely, you may also lose if the company suffers a
loss or performs below expectations.
How to make money in stock
investing?
2 ways to make money is the stock market:
1. Dividends (income) – Dividends increase as
companies that own the shares increases income
generated.
2. Capital appreciation – Prices of stocks increase
if EXPECTED income of the company owning the
stocks increase
 GAMBLING in the stock market – when a stock is
purchased without considering the factors above
PHILIPPINE STOCK EXCHANGE
(PSE)
 A marketplace in which 260 publicly listed stocks are
traded.
 Trading on the PSE trading starts at 9:30 am and ends
at 12:00 pm, pauses for a 1 hour 30 minute break, and
resumes trading from 1:30 pm to a 3:30 pm session
closure.
To whom is stock investing for?
 To those who desire to grow their EXTRA cash
 To those who desire to monetize what they know
 To those who enjoy learning new things
 To those who love the never ending journey of learning
 To those who enjoy talking about ideas
 To those who love a rewarding mental exercise
 To those who wish to improve his/her outlook in life
 To those who enjoy living life
How to Get Started in Stock
Investing?
I.
II.
III.
IV.
V.
VI.
Set aside cash (enough to keep your emotions out of
the stock market)
Find a broker
Selecting and buying your first stock
When to SELL?
Review your holdings
Q&A
Set aside cash
 Pay all your debt
 Set aside cash as emergency fund
(6 month worth of salary)
 Doing the tasks above will free you
form any emotion in stock investing
Find a broker
 2 types of broker
Traditional
2. Online brokers – Citiseconline, BPItrade,
Firstmetrosec
1.
 Things to consider in selecting a broker:
You are COMFORTABLE doing business with
2. Commission rate
1.
Selecting and buying your first
stock
Great story – investment theme
a. What are upcoming trends?
b. What adds value?
2. Great company
a. How is the management?
b. Market leader?
c. Strong consumer for products produced?
3. Cheap
4. Why did the opportunity exist?
5. When to SELL?
1.
Sample case
Jollibee Foods Corporation (2008)
Great story – Jollibee Foods
Corporation (April 2008)
 Remittances abroad kept on growing (13% in 2007)
 You expect the Philippine economy to grow based on
7.3% increase in GDP on 2007
 You expect this economic growth will increase
consumer spending
Great company
 Owns Chowking, Greenwich, and Jollibee
 You observed that their restaurants are often full
 You personally like their products
 People YOU KNOW like their products
 Management were not involved in any rumors of bad
management practice
 Market leader
Cheap
 Cheapness is determined by the following metrics:
a) Price to earnings ratio
b) Price to book value ratio
c) Comparing it with competitors
 Price to earnings ratio = Stock price / Diluted EPS
 Price to book value ratio = Stock price / Book value
 Book value = Common stockholders equity /
outstanding shares
Putting it all together
JFC
2007
Price (4/20/08) (a)
Equity (b)
Outstanding shares (c)
PCKH
2007
47
10
12,642,928,847 516,554,830
1,015,437,732 192,636,364
Book value (BV) [b / c] (d)
12.45
2.68
Diluted Earnings per share (EPS) (e)
2.341
0.28
3.77
3.73
20.08
35.71
Price to book value [a / d]
Price to earnings ratio [a / e]
Cheap
Price to book value
ratio
Price to earnings ratio
Jollibee Foods
Pancake House
3.77x
3.73x
20.08x
35.71x
Why did the opportunity exist?
 PCKH is growing 30% in revenues due to acquisition
while JFC grows 14%
JFC
PCKH
2008 - 2009 (1 year)
1%
0%
2008 - 2011 (3 year)
108%
-12%
2008 - 2013 (5 year)
166%
15%
When to SELL?
Determine the target price:
• Maximum target price (2.341 x 35): P81.93 upside of
72%
• Desired target price 50% gain: (47 x 1.50) P70.50
OR when the reason you purchase the stock no
longer stands
My stock pick – First Gen
Corporation (FGEN)
(Disclaimer: not a recommendation to buy)
Great story
 Strong electricity demand
 Electricity demand expected to grow as the Philippine
economy grows
Great company
 Source all of its revenues from electricity generation
 Has a contract to sell electricity produced to Manila
Electric Company (Meralco)
 Passes incremental costs to electricity consumers thus
maintaining profit margin
Cheap
 Price to earnings ratio = Stock price / Diluted EPS
 Price to book value ratio = Stock price / Book value
 Book value = Common stockholders equity /
outstanding shares
Cheap
Company
Aboitiz Power (AP)
Energy Development Corporation
(EDC)
Alsons Consolidated Resources (ACR)
Trans-Asia Oil and Energy Dev't Corp.
(TA)
First Gen Corp (FGEN)
Current
price
(1/23/14)
PE ratio
BV
multiple
based on
'12 BV
37.00
11.14
3.35
5.39
11.72
3.03
1.31
16.38
0.91
1.98
20.43
1.38
15.96
7.29
0.84
Why did the opportunity exist?
 A fire incident happened at the San Lorenzo Power
Plant which burnt their 250MW transformer
 FGEN’s 49% subsidiary was damaged severely by
Yolanda
In my opinion, electricity demand will likely to grow in
the future and that FGEN’s earnings will “normalize” in
the next year or two.
When to SELL?
Determine the target price:
 Maximum target price (2.19 x 11): P24.09 upside of 50%
 Desired target price 20% gain: P19.15
Review your holdings
1. Annual Reports or SEC form 17 – A
(www.pse.com.ph)
2. News papers
3. Your current connections
4. Your own observations
Annual Reports or SEC form 17 – A
Recommended sites to learn stock
investing
 http://www.oldschoolvalue.com/blog/ (highly
recommended)
 http://www.pseacademy.com.ph
 Fundamentalenthusiast.wordpress.com
END
Thank you!
Download
Related flashcards
Finance

14 Cards

Credit

13 Cards

Payment systems

18 Cards

Payment systems

59 Cards

Create flashcards