Tag Archives : value investing

10 Cheap Stocks To Buy Using Different Valuation Metrics 4

Everybody loves to spot a bargain and investors scouring stocks are no different. But what many new investors fails to understand is that there is a difference between shares which are ‘cheap’ and those which offer genuine value. To help in identifying undervalued stocks, there are a number of ratios to look at. In this article, we will see which shares are cheap based on P/E ratios, PEG ratios and Price to Book ratios 1. Price to Earnings Ratio (P/E) P/E Ratio = current share price / earnings per share If Company A currently has a share price of 100p and is forecast to generate earnings per share of 20p […]

March Stock Purchase: GSK, Shire, NCC, Stagecoach 2

March saw the FTSE 100 hit a record high. London’s main index is now trading at an astonishing P/E of 38 when looking at trailing earnings. On a forward earnings basis, the FTSE only trades at a P/E of 14.67. Much better! The vast disparity between the two is because the heaviest components of the FTSE 100 are oil and mining related stocks. With commodity prices bouncing back, analysts expect these companies to produce much higher earnings over the year and that is why the forward P/E is more than twice as low as the trailing P/E. Personally, I think analysts are being too kind with earnings here but if […]

Burberry (LON:BRBY) Shares Sale : When A Stock Is Overvalued Sell

Having gone years without selling out of a position, it feels odd writing about my second share sale so quick after my first one. Making my second stock sale all the more remarkable is I didn’t think it would be Burberry. Since initiating my position in Burberry back in July 2016, I imagined that I would be holding these shares for years and years – even though I didn’t see it as a legacy position. Whenever I make a stock purchase, the company I am investing in either has to be a serial compounder of wealth or it is fundamentally undervalued. The biggest opportunities for large returns are by buying […]

Estee Lauder (EL) Share Purchase – Wonderful Companies Deserve High Valuation Multiples

Those familiar with my investment approach know that one of my key philosophies is to buy shares trading at a Price to Earnings ratio of under 20. Simply put, I do not like to overpay for stocks. It may thus come as a surprise that I purchased shares in the Estee Lauder company (NYSE:EL) whose shares trade at a P/E ratio of 24. No, I have not lost my mind! Neither have I thrown my investment thesis out f the window. Rather, I have bought shares in Estee Lauder due to its high returns on equity (ROE). To understand the concept of Return on Equity, have a look at the […]

To Be a Successful Stock Market Investor Think Like a Business Owner

Modern day stock picking is akin to gambling money in a casino, you place money on a particular ticker symbol and hope that it goes up. How many times have you read an article on that ‘one magic stock’ or seen people speculate on a single stock based on an online forum. The majority of people think that the stock market is a route to overnight millionaire status. The mass media has led people to believe this as they selectively run stories on people who have become millionaires overnight based on a single stock pick whilst sunning the countless others who have lost it all by placing everything, including their […]

The Warren Buffet Blueprint – 4 rules to follow when investing

You can buy stocks like one of the world’s most famously successful investors, if you just follow his blueprint. To this day, Warren Buffett’s success is legendary… And whether he’s buying an entire business outright or simply purchasing shares of its common stock, the “Oracle of Omaha” says he has always taken the same approach. Buffett employs a “bottom up” approach that looks closely at all aspects of a particular business, irrespective of things like the macroeconomic environment or the direction of the stock market. The Warren Buffet blueprint all hinges on four simple rules. These are the things that Buffett considers all-important. If you look for them, you can […]

Use Return on Equity (ROE) to find great stocks like Warren Buffet !

One of Warrant Buffets best criteria for picking stocks is using the Return on Equity Formula. Just take a look at the annual report of Berkshire Hathaway – the company Mr Buffet Runs – for proof of this. Under acquisition criteria number three, it states that a company must generate a good return on equity (ROE) while employing little or no debt. So why is ROE such an important metric? The Return on Equity reflects the management’s ability to allocate capital efficiently and effectively. It measures how much return is generated for every dollar of shareholder equity. Companies with high ROEs – greater than 155 – have the ability to […]

BT (BT.L) Stock Purchase – A proxy of the British consumer 2

In a recent post outlining my Astrazeneca share purchase, I mentioned that I had bought shares in BT as well. I bought 272 shares at a stock price of 397. Since then, the BT share price has gyrated bouncing up and down between a stock price of 450 and 350. A movement within such a large range over a short period of time is rare for blue chip stocks and it is fair to say that BT has been volatile in the wake of the Brexit vote. Talking about Brexit, British focussed businesses have faced the biggest brunt in term of decreased valuations. FTSE 250 companies along with Banks, Insurers […]

G4S (GFS) stock purchase – Securing My Portfolio 2

This past week, I bought shares in the biggest security service company in the world, G4S. Although this behemoth has faced a beleaguered past 12 month, the current share price looks really attractive. At the current share price, I expect G4S to be a really good long term buy and provide returns in excess of 13% a year. Valuation When investing in companies, one of the most important factors that will determine the return you get is the price you initially pay. Apart from solid growth companies like Visa and Starbucks or elite companies like Unilever and Coca Cola, I would argue that you should not buy a stock if […]

Genie Energy (GNE) Stock Purchase – Israel’s Future Oil Giant

2016 has started with a massive selloff in global equities. Stock prices have fallen amid the energy crash, fear of Chinas slowdown and the Feds Interest Rates hike on emerging countries. The financial media always seems to point out that falling stock prices are a bad thing but for someone like me who is in their asset accumulation part of their lifecycle, the sell-off is good news. I am now able to buy ownership stakes in businesses for less than I would have been able to before the current turmoil. Buying stocks at lower valuations is great as you get a higher dividend yield and  you are able to compound […]