Bargain Hunting for Stocks


BargainEverybody loves a bargain. Kaya nga may mga SALE sa mall.:) And even in investing, people are always looking for a “bargain”. From stocks, managed funds and properties; people of course look for the best deal. Ang mahirap lang nga, pag investments ang pinag-uusapan eh we don’t really know how good of a deal we are getting. Put another way: Pag mura ba ang presyo eh ok na?

Well, someone once said that “Price is what we pay and Value is what we get” – and that is quite true when it comes to investing. Hindi naman kasi porke mura eh maganda nang bilhin agad – at hindi rin porke’t mahal ay pangit na itong bilhin.

Per share

EXAMPLE:


In 2012, there was a company that ended the year at 28 times earnings. By almost any measure, it was among the more expensive issues in the PSE. Tuloy, many people said: “Ang mahal. Hintayin ko na lang bumaba.”

There was also another company at the time that ended the year at only 5 times earnings. Many people thought that were getting a bargain since this particular issue was trading at almost 10 times earnings earlier in 2012. Sabi nga: “Bili ka nyan tapos hawakan mo. Mura yan.”

Well, 2014 is about to end and the first company has gotten even MORE expensive (38 times earnings na) while the second one has gotten even cheaper at 4.6 times earnings.

So, which was actually the better deal?

Teka, parang unrealistic naman kung bibili tayo nang hindi alam kung ano pinag-uusapan di ba?

True.

The first company is Jollibee (Ticker symbol: JFC) while the second is Century Properties (Ticker Symbol: CPG).

THE POINT:

Buying something just because it is “cheap” or avoiding something simply because it is “expensive” is flawed. We should clearly determine the value we are getting for our money – and that means understanding the company we are buying into.

Merong mga kompanyang mahal talaga at merong mura and true bargain hunting means looking for those expensive companies that are temporarily cheap – hindi yung pagbili ng companies that are usually cheap. (Hindi naman palagian ang sale di ba? ;) )

‪#‎aralmunabagoinvest‬

Aya Laraya

Footer stocks


Comments

  1. Levi says

    Hi Prof Aya,

    Attended the “Seizing Opportunities” Seminar of Sun Life of Canada (Philippines), Inc. at Mimosa Convention Center this afternoon (13 November 2014). Wow! Really learned a lot in a span of a little more than 1 hour more or less. Thank you Sir Aya! Keep up the GREAT work in educating more Filipinos on how to invest in the stock market.

  2. says

    That’s so true!

    A lot of blue chips in the PSE are trading “high” price-to-earnings ratio. Like the ayala companies. They never seem to hit 19x, nevermind 15x. And yet they deliver great profits and constantly increase their value, and by extension their share price.

    Most of the “cheap” stocks (at least that I know of) seem to be cheap for a reason and aren’t really bargains.

Leave a Reply

Your email address will not be published. Required fields are marked *