Why Doesn't Anyone Talk About These Great Companies On Share Trader?

[ENP]

- Woolworths
- Westfield
- Wesfarmers
- Coca Cola Amatil
- Super Cheap Auto
- Dominoes Pizza

Why does everyone talk about these mining stocks that don't make profits and are hoping to strike it big sometime in the future. Why don't you just wait until these come on sale and buy into these companies above with pretty good competitive advantages.

Just wondering.

Thanks.

[peat]

yes I 've asked this question before too ENP and the reason is that they are boring and only move a few % occasionally etc whereas most active traders are more speculative in their nature and are looking for that 10 bagger as they call it, rather than portfolio based investment. etc etc....

[shasta]

- Woolworths
- Westfield
- Wesfarmers
- Coca Cola Amatil
- Super Cheap Auto
- Dominoes Pizza

Why does everyone talk about these mining stocks that don't make profits and are hoping to strike it big sometime in the future. Why don't you just wait until these come on sale and buy into these companies above with pretty good competitive advantages.

Just wondering.

Thanks.

These larger cap companies are apart of the main indexes, have institutional support & often are "fully valued" as they get covered by all the main brokers, so there's not always the same short term % upside from say a small mining explorer company who are actively drilling.

Other than that, just seems people don't wish to discuss blue chips, by all means start or continue old threads on them!

[ENP]

Oh I see so they aren't good for trading but are pretty good for long term holds. As most of the people on here are traders...?

[ELYOB]

The risk is still there with blue chips , note GFC times . One of Australia's best analysts says risk of the demise in the Euro will send Oz blue chip(s) down . Demise Euro = China = Oz . Property is in a bubble and the dreamers think it will always go up.... property is 30% overvalued , so a risk there too over the next 2-3 yrs . So, if you are not a trader , one has some thinking to do about risk ....

[trackers]

Hi ENP,

From my point of view they are very much buy and hold stocks.. But if you're going to buy then hold them for a large period of time, whats there going to be to discuss?

thats why the small cap, short-medium term holds (medium/high return) dominate the front pages here (IMO)

[ENP]

But if you're going to buy then hold them for a large period of time, whats there going to be to discuss?


I think you hit the nail on the head with that one. Thanks for clearing it up everyone.

[macduffy]

You will see these stocks referred to occasionally, often on related threads. WES and WOW were discussed quite recently for example on a thread about Favourite Stocks.

I think a big part of the lack of regular discussion is the fact that most contributors here are Kiwis whose interest in Aussie stocks tends to the mining/spec/trading end of the spectrum. The lack of dividend imputation - from an NZ point of view - takes away some of the appeal of the leading, dividend - paying Aussie stocks.

[peat]

ENP
I would have still thought that traders would still play the blue chips... one advantage you have with them is they are less likely to fall over completely so this means one could consider higher leveraging or risker % of portfolio etc or . Its not like their isnt movement in them at all.
eg Just looking at two major Ozzie stocks BHP within the last year was at 32 and went to 44 and is now back to 38. Thats a 37% increase and then a 13% decrease. Westpac made a 50% increase over the last year from 19 to 28.
So even on the raw stocks that should be sufficient to make decent profits yet alone the other possibilities using CFD's or options etc.

So I would just like to suggest that the potential is there for traders , perhaps not overnight, but postition trading could still be very rewarding.
with less potential downside.

I agree that they are analysed a lot more so the plays may be more related to overall economic conditions that specific stock factors but still.....

[POSSUM THE CAT]

ENP Old adage buy in gloom sell in boom

[Ketel One]

Here's my quick thoughts. I’m not sure if these answers apply to everyone, but there’s a number of reasons I find resource stocks appealing.


Growth potential. Small market cap + potentially large resources = a lot of potential for growth (potential multibaggers as peat mentioned). I’m young(ish!) – 27 – so I have a reasonably high tolerance for risk & have (so far) had most success with small caps.
Conceptual ease of understanding. I try to buy and sell using TA, but like to have as in depth an understanding of the companies I invest in as possible. Resource stocks are conceptually simple; the value/price of the commodity they explore/produce/sell is transparent and easily available (e.g. oil/gas prices). The business model is clear, there is less dependency on predicting the behaviour or response of consumers/customers (anyone who has done any research in social science knows how difficult it is to make predictions about human behaviour). Things like marketing, multiple or changing products, competition, etc. are largely not factors. To be honest I find evaluating the prospects of a company like Dominoes Pizza to be utter speculation- it’s success hinges so much on the ongoing decisions of its management and employees, that I wouldn’t know where to start.
Size and ease of understanding. I find much smaller companies easier to understand. This might be because I don’t have much experience but the numbers involved in extremely large companies quickly become harder to interpret, especially with revenue coming from different sources etc.
Specialization: Because of the focus of sharetrader (which is what I started looking at when I became interested in investing/trading) I started off looking at the stocks discussed. It’s much easier to evaluate a company and its prospects if you have an in depth understanding of the industry and the company’s peers.

[Ketel One]

Also, I should add, I started trading/investing just before the GFC really hit. I watched as pretty much everything went down, so I perhaps don’t perceive bluechips/large caps as much less riskier than more speculative/smaller caps. As far as i’m concerned, both can fall off a cliff if things get ugly, but the bluechips don’t have the same potential upside (if things don’t fall off a metaphorical cliff).

I'm not sure if this perception actually matches reality; i'd be interested to hear more about the validity of this.

[fwu005]

Here's my quick thoughts. I’m not sure if these answers apply to everyone, but there’s a number of reasons I find resource stocks appealing.
Growth potential. Small market cap + potentially large resources = a lot of potential for growth (potential multibaggers as peat mentioned). I’m young(ish!) – 27 – so I have a reasonably high tolerance for risk & have (so far) had most success with small caps.


What are the small market cap companies are you holding, watching and/or interesting

[h2so4]

I like all companies, large medium and small, and I find most companies get reasonable post time on ST.At the moment most ST posters are chasing gold resource stocks. The trick is to find value? Find value in a large company and you've struck GOLD. I prefer WES to WOW, wouldn't no how to value Westfields and haven't looked at the other 3 you mentioned. I may have looked at Supercheap Auto but probably dismissed it. Is there some particular company you would like to discuss?

[ENP]

I like all companies, large medium and small, and I find most companies get reasonable post time on ST.At the moment most ST posters are chasing gold resource stocks. The trick is to find value? Find value in a large company and you've struck GOLD. I prefer WES to WOW, wouldn't no how to value Westfields and haven't looked at the other 3 you mentioned. I may have looked at Supercheap Auto but probably dismissed it. Is there some particular company you would like to discuss?

Well the ones I would consider investing in would be...

- Woolworths
- Wesfarmers
- Coca Cola Amatil
- Super Cheap Auto
- Reject Shop (It's sort of like the Warehouse but in Australia)
- Sky TV (On the NZX)

I've also looked into smaller companies such as Aevum Retirement Villages, Currently own Ryman Health already but would also consider any other large food/consumer type products with consistent improvements in their financial statements. People are always going to need food and discount consumer goods. I also see Retirement Villages as a more stable option into the healthcare industry. I'm also quite keen on Sky TV. I really like the look of their financial statements and their growing consumer base and new products.

I'd appreciate your discussion on the above ones if you would like? I don't have capital to invest right now but will keep an eye on all of them in the near future.

[Phaedrus]

Why don't you just buy into these companies?

From my point of view they are very much buy and hold stocks.

....they are pretty good for long term holds.
But are they really? The fact that these may be fundamentally sound, profitable companies doesn't automatically make them good long-term investments. Take a look at the performance of Wesfarmers and Westfield over the last few years, for example. Over this period these have been good stocks to be out of, wouldn't you say?

http://i602.photobucket.com/albums/tt102/PhaedrusPB/WDCwes.gif


I don't perceive bluechips/large caps as being less risky than more speculative/smaller caps. As far as I'm concerned, both can fall off a cliff if things get ugly...I agree. In fact, over the period of the above chart, these 2 "bluechip" stocks fell about twice as far as the market average!


So they aren't good for trading......... They surely ARE good for trading, as Peat pointed out. Even "active investing" gives returns way, way ahead of simply "buying and holding". Take a look at SUL and DMP for example. The most cursory glance shows that there were extended periods of time when they were in obvious downtrends. Dominoes was in a downtrend for 3 years. Supercheap Auto fell from $5 to just $2 over 2 years. That's the sort of losses staunch "buy and hold" investors can incur. Common sense tells us that it is not good to hold downtrending stocks. Just 2 "trades" in 5 years gave returns that knocked the socks off doggedly holding over the same period.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/SULdmp.gif

Coca Cola Amatil is another stock that "can" be traded profitably, but more pointedly, you would be a bit of a mug to blindly hold such a stock. While it is in a long-term uptrend, the secondary "medium-term" trends are where the big profits lie. Again, just 2 trades in 5 years would give profits that totally eclipse those made by long-term holders. I have included the Relative Strength Index here to show that even with occasional "bad" signals like the premature exit last October, the overall performance still leaves "buy and hold" returns for dead. Time and time again, long-term holders made big profits from CCL - and then gave the greater part of those gains back to the market.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/CCL514.gif


Old adage buy in gloom sell in boomJust because it is an old adage doesn't mean it is good advice! This, in fact, is very bad advice and is diametrically opposed to the more sensible (and more profitable) "cut your losers and let your winners run". Things were pretty gloomy in early 2008 - but the market continued to fall for a further year. Those that bought in gloom back then will still be gloomy! Markets boomed from 2003 to 2007. Goodness knows when the idiots "selling in the boom" would have got out. 2004 maybe?

[ENP]

Phaedrus. Thanks heaps for your post! Very interesting.

But doesn't Warren Buffett and other value investors hold for the long term and only buy when they are under-valued?

Or do value investors still buy and sell quite regularly? My strategy is just to buy when they are undervalued and hold onto them for quite long term reaping in their high earnings per share and dividends per share. If I'm wrong can someone please tell me what I'm missing? Thanks.

Also, how do you strategically have money sitting around so you can take advantage of when stocks are undervalued? Do you just sit on cash in the bank and wait for a stock crash?

[h2so4]

Well the ones I would consider investing in would be...

- Woolworths
- Wesfarmers
- Coca Cola Amatil
- Super Cheap Auto
- Reject Shop (It's sort of like the Warehouse but in Australia)
- Sky TV (On the NZX)

I've also looked into smaller companies such as Aevum Retirement Villages, Currently own Ryman Health already but would also consider any other large food/consumer type products with consistent improvements in their financial statements. People are always going to need food and discount consumer goods. I also see Retirement Villages as a more stable option into the healthcare industry. I'm also quite keen on Sky TV. I really like the look of their financial statements and their growing consumer base and new products.

I'd appreciate your discussion on the above ones if you would like? I don't have capital to invest right now but will keep an eye on all of them in the near future.
There are threads for all of those except for ccl. Perhaps you could start one. I will look for your posts. In the meantime keep saving your pennies. There is no rush.

[shasta]

Well the ones I would consider investing in would be...

- Woolworths
- Wesfarmers
- Coca Cola Amatil
- Super Cheap Auto
- Reject Shop (It's sort of like the Warehouse but in Australia)
- Sky TV (On the NZX)

I've also looked into smaller companies such as Aevum Retirement Villages, Currently own Ryman Health already but would also consider any other large food/consumer type products with consistent improvements in their financial statements. People are always going to need food and discount consumer goods. I also see Retirement Villages as a more stable option into the healthcare industry. I'm also quite keen on Sky TV. I really like the look of their financial statements and their growing consumer base and new products.

I'd appreciate your discussion on the above ones if you would like? I don't have capital to invest right now but will keep an eye on all of them in the near future.

ENP

You might want to look into companies with above average ROE (Return on Equity), another way to see what value is being created for shareholders. You'd be wanting double digit returns at a minmum

Another company you might want to look into is UGL.

Recent Presentation:

http://www.stocknessmonster.com/news-item?S=UGL&E=ASX&N=591960

Last 5 years has had increasing order book, revenues, profits, eps & dividends (this HY was slightly down)

Market Cap is ~$2.5b & currently on a rich P/E of 18, & dividend yield of 4.4%

Even the 1 year chart shows it dropped below $10, before recovering to $16, now showing some strength

https://www.directbroking.co.nz/cgi-bin/sparkle.dll/superchart?template=dblsuperchart&session=0&instrument=UGL&exchange=ASX&period=1Y&adj=yes&vs=LINE&ct=CANDLE&compi=&ma1=30&ma2=180&bb=&ind=RSI&ra=2

The 3 month chart shows the recovery a little clearer

https://www.directbroking.co.nz/cgi-bin/sparkle.dll/superchart?template=dblsuperchart&session=0&instrument=UGL&exchange=ASX&period=3M&adj=yes&vs=LINE&ct=CANDLE&compi=&ma1=10&ma2=30&bb=&ind=RSI&ra=2

[soulman]

Just for the record, if you bought those stocks mentioned in the early 2000, the rate of return would be awful. Of course, TRS, SUL and DMP are excluded because they are more like mid cap than blue chip. Long term hold are fine with these coy if that's your objective but they are slow mover and hence small returns (in term with dividends).

I have traded some of those stocks with some success but selling most of my LT WES holdings at $18 was bad. Still learning.

[h2so4]

Phaedrus. Thanks heaps for your post! Very interesting.

But doesn't Warren Buffett and other value investors hold for the long term and only buy when they are under-valued?

Or do value investors still buy and sell quite regularly? My strategy is just to buy when they are undervalued and hold onto them for quite long term reaping in their high earnings per share and dividends per share. If I'm wrong can someone please tell me what I'm missing? Thanks.

Also, how do you strategically have money sitting around so you can take advantage of when stocks are undervalued? Do you just sit on cash in the bank and wait for a stock crash?

A value investors job is to value the business. Then buy when he perceives that a stock is undervalued and then sell when a stocks sp reaches or exceeds that value.

A value investors portfolio should always be active.

Nothing wrong with money in the bank while you wait for that bargain.

[ENP]

Oh right. I always thought value investors were buy and hold for the very long term.

I heard a quote saying "my preferred time to hold onto a stock is forever"

[h2so4]

Holding forever can provide less work. Selling might mean a tax problem and you then have the problem of finding another opportunity. But it might also mean less returns. I prefer to sell and find another opportunity. Buffett has lost more money than we will ever make but his outstanding growth has been acheived by continual reinvestment in better opportunities.

[ratkin]

A couple of years isnt long term. No where near it

[h2so4]

Half an hour can be long term if you are in a Dentists waiting room.

[percy]

Oh right. I always thought value investors were buy and hold for the very long term.

I heard a quote saying "my preferred time to hold onto a stock is forever"

I think we would like to follow this advice,however situations and company"s prospects change.As the charts point out, buy and hold of good companies can work against you.You may buy on low PE and high divie yield, then company gets things wrong PE goes sky high and divie stopped.May only be tempory problem or it may signal the company is going down hill.Buffett usually knows which!!
No one seems much interested in AVE,however they have just upgraded their profit forecast.I have them and like them.I also have RYM.RYM is a far better company.AVE a bit lifestyle while RYM are full care.


SHASTA.you quoted ROE in one of your posts.Is there anywhere I can find a shedule of companies with high ROE?

[Huang Chung]

SHASTA.you quoted ROE in one of your posts.Is there anywhere I can find a shedule of companies with high ROE?

Not sure if this is published in a tabular format, but check out Roger Montgomery's website/blog. ROE is a fundamental metric in the way he values stocks.

[percy]

SHASTA.you quoted ROE in one of your posts.Is there anywhere I can find a shedule of companies with high ROE?

Not sure if this is published in a tabular format, but check out Roger Montgomery's website/blog. ROE is a fundamental metric in the way he values stocks.

Thanks HC.A lot of reading.About 12 years ago I got hold of a print copy with financial sumary,s of australian companies.Was easy to see all the ratios.you could flick through and see EPS growth.revenue,PE,DIV,shareholders equity.borrowings.all in book form.Just like to get hold of the latest copy,but would expect no longer printed.Also gave company history.I can get the same from going to the australian,s web page and putting in company code.But I was hoping to do it in reverse,ie see high ROE then research the company.

[shasta]

I think we would like to follow this advice,however situations and company"s prospects change.As the charts point out, buy and hold of good companies can work against you.You may buy on low PE and high divie yield, then company gets things wrong PE goes sky high and divie stopped.May only be tempory problem or it may signal the company is going down hill.Buffett usually knows which!!
No one seems much interested in AVE,however they have just upgraded their profit forecast.I have them and like them.I also have RYM.RYM is a far better company.AVE a bit lifestyle while RYM are full care.


SHASTA.you quoted ROE in one of your posts.Is there anywhere I can find a shedule of companies with high ROE?

ASB Securities has it within there online research feature, which is available for DIY online clients, after my *cough* battle with ASB i am no longer with them, nor have access, most brokers should have this available, DB perhaps?

It's not hard to work out though...

[peat]

About 12 years ago I got hold of a print copy with financial sumary,s of australian companies.Was easy to see all the ratios.you could flick through and see EPS growth.revenue,PE,DIV,shareholders equity.borrowings.all in book form.Just like to get hold of the latest copy,but would expect no longer printed.Also gave company history.
I saw a book exactly like this at the University Bookshop in Auckland yesterday. I'll get the exact title on Monday
And googling found me a book by Morningstar covering teh top 500 Oz companies.

[Huang Chung]

Yeah, I forgot that Huntley's published this.

Also, the is a book called Top Stocks 2010 by Martin Roth. Comes out yearly.

Not sure if it gives ROE for each of his 'top stocks', but something you might be able to check out.

[percy]

I saw a book exactly like this at the University Bookshop in Auckland yesterday. I'll get the exact title on Monday
And googling found me a book by Morningstar covering teh top 500 Oz companies.

Great stuff,
Shasta, HC,Peat thanks.
Peat, Morningstar is the Huntley one HC mentioned.Looks exactley want I remember.Was excellent.Would you mind getting me the isbn off the back cover of the book you saw at the Uni Bookshop.If I google the isbn the full details of the book comes up,and where and what price it is available.

[Huang Chung]

Any good bookstore should be able to order either of the abovementioned books based on title/author details. I've done this plenty of times through Borders (not sure if Borders are in Kiwiland or not).

[trackers]

Hey fellas,

Steve fleming mentioned this site on another thread, its a goldmine. whilst I'm particularly interested in options, the site has:

- All dividend yielding stocks listed by yield
- All stocks ranked by market capitalisation
- Average P/E ratios and dividend yield of the ASX month by month (as a whole, not by individual stock)

Enjoy: http://www.afrsmartinvestor.com.au/tables.aspx

[shasta]

Any good bookstore should be able to order either of the abovementioned books based on title/author details. I've done this plenty of times through Borders (not sure if Borders are in Kiwiland or not).

Yeah we got Borders over here HC

[Huang Chung]

Yeah we got Borders over here HC

I'll have to get over there one day (never visited, and I'm 46 yo)....just got to get out of my head that all you've got are sheep with big smiles on their faces ;-)

[shasta]

I'll have to get over there one day (never visited, and I'm 46 yo)....just got to get out of my head that all you've got are sheep with big smiles on their faces ;-)

Well in Christchurch some guy had sex with a donkey, but up in the North Island we are a little more civil.

Acutally some of the better contributors on Sharetrader are from down South, so i'm not tarring them with the same brush.

If you ever come to Wellington, let me know

[ratkin]

All the info on these books can be found on the ASB securities site in the research section

[percy]

I'll have to get over there one day (never visited, and I'm 46 yo)....just got to get out of my head that all you've got are sheep with big smiles on their faces ;-)

HC.
You would be surprised how many sharetrader friends you have,who would make you welcome and who would look forward to meeting you should you decide to visit one day.NZ is a great place to tour.

[Huang Chung]

HC.
You would be surprised how many sharetrader friends you have,who would make you welcome and who would look forward to meeting you should you decide to visit one day.NZ is a great place to tour.

Cheers percy...would love to drop in at one of the sharetrader meeting you guys have every so often. Might just happen one day.

[Lizard]

Book it in for Wellington on 12th June - we have attendees booked from the Big 3 cities, so is shaping up for a good one! If you're keen, we'll put out a call for accommodation and there might be someone with a spare bed in the Capital...

[percy]

Book it in for Wellington on 12th June - we have attendees booked from the Big 3 cities, so is shaping up for a good one! If you're keen, we'll put out a call for accommodation and there might be someone with a spare bed in the Capital...
HC
I know you like cars so look up www.thecarmuseum.co.nz .It is not far from Wellington and is world class.

[Huang Chung]

Thanks Liz, but June / July is always a nightmare for me workwise, so I'll definitely not be able to make it then.

And Percy, thanks for the tip.

[Oiler]

Thanks Liz, but June / July is always a nightmare for me workwise, so I'll definitely not be able to make it then.

And Percy, thanks for the tip.

Bugga...... we will get you to a future meeting in Auckland, Wellington, Christchurch.

[peat]

Would you mind getting me the isbn off the back cover of the book you saw at the Uni Bookshop.If I google the isbn the full details of the book comes up,and where and what price it is available.
The book is called Top Stocks 2010 and the ISBN is 9781742169682 - it covers nearly 100 Australian stocks with a couple of pages on each

As others have said I would imagine a lot of that information will be online but yeh the book might be handy for ya.
$30 from fishpond
http://www.fishpond.co.nz/Books/Business/Money_Investment/Finance/9781742169682/
2610

[percy]

Peat
thank you for the trouble you went to.Looks as though it will be a good read.