What price to buy Macdonald and Proter and Gamble?
PG has a free cash flow of $12 B and cash of $13 B and long term debt of $38 B. The current price is $104 and market cap is $258 B. Only if the share price falls to 1/4 of the current price, that is $25, can it be a very good buy. Because the market cap will be $60 B and the free cash flow is 1/5 of the share price.
MCD has a market cap of $124B and a share price of $167. Free cash flow is only $5 B and the cash is $1B and it has a long term debt of $52B. Only if the market cap falls to $20B can it be a good buy. Wow, that will means its share price will drop to $30.
Wow, will this materialise? I do not know, but if it does not, the share price will likely see-saw for the next 10 years until it increased its cash flow.
US stocks are not a good place to put our money in. Where to put our funds?
Bonds. Interest rate are at a record low now. If there is a bank or big company default on its debt, interest rate will shoot right up and then bond prices will collapses, if I am not wrong.
Options and futures are too dangerous even for the professional investors.
Foreign currencies are also not safe.
If you have $1 Billion to invest, where will you put your funds into?
Fixed deposit? I really has no idea. Maybe after my dream I know where to invest the funds.
Thursday, March 26, 2020
US stocks and Sg stocks
I think it is a Long Long way to the bottom of the stock market (2-3 years) as many US companies like MacDonald, 3M, Johnson and Johnson, Coco-cola and Apple have poor balance sheet. What do I mean by this?
For example, Macdonald has a market cap US$110B, PE of 18 and a dividend of $5 for a share price of $148, giving it a dividend yield of 3%. Furthermore 0.12% of the shares are owned by insiders and 68% by institutions. These are bad signs. To top it off, analysts are recommending people to buy at a score of 2.1 (1- strong buy -5 sell). Over the years, cash has reduced from $2.5B to $0.8B and long term debt has increased from $29B to $34B.
Is this a one-off story of a great company falling from grace? No. Because stocks like coco-cola and Johnson and Johnson paint a similar story. I was shocked to learn of this fact. Could Warren Buffet be wrong on coco-cola stock or is Peter Lynch wrong on this analysis? I guess Peter Lynch is right and Warren could be right because he bought the shares at a low price so it does not hurt him if the share price falls. Even the stock like Apple has a Long term liabilities of $114 B and cash of $67 B. In Singapore there are a large number of shares whereby the cash per share is more than the share price and the balance sheet is much stronger and the dividend yield is 5%-8%. US stocks usually has less cash than Long term debt. This is a horrible position to be in now.
Moreover, the interest rate is now dancing near zero. There is nowhere to go but up only. At this point in time, people are not talking about the US banks health. Rather, they are more concerned about the health crisis of the COvid-19 virus. It is a matter of time, there will be a credit crisis and then companies will start going belly up and waves of debts defaulting will impact the banks. Perhaps Fifth third bank and Huntington banks will go to 50 cents in this once in a lifetime opportunity. Maybe I am dreaming.
Anyway, even if this crisis is not here, US companies are highly overvalued and Singapore stocks are undervalued. The tables could be turned onced the tide has turned. Let us see what will happen next. I will choose to be with the financially strong rather than with the weak.
For example, Macdonald has a market cap US$110B, PE of 18 and a dividend of $5 for a share price of $148, giving it a dividend yield of 3%. Furthermore 0.12% of the shares are owned by insiders and 68% by institutions. These are bad signs. To top it off, analysts are recommending people to buy at a score of 2.1 (1- strong buy -5 sell). Over the years, cash has reduced from $2.5B to $0.8B and long term debt has increased from $29B to $34B.
Is this a one-off story of a great company falling from grace? No. Because stocks like coco-cola and Johnson and Johnson paint a similar story. I was shocked to learn of this fact. Could Warren Buffet be wrong on coco-cola stock or is Peter Lynch wrong on this analysis? I guess Peter Lynch is right and Warren could be right because he bought the shares at a low price so it does not hurt him if the share price falls. Even the stock like Apple has a Long term liabilities of $114 B and cash of $67 B. In Singapore there are a large number of shares whereby the cash per share is more than the share price and the balance sheet is much stronger and the dividend yield is 5%-8%. US stocks usually has less cash than Long term debt. This is a horrible position to be in now.
Moreover, the interest rate is now dancing near zero. There is nowhere to go but up only. At this point in time, people are not talking about the US banks health. Rather, they are more concerned about the health crisis of the COvid-19 virus. It is a matter of time, there will be a credit crisis and then companies will start going belly up and waves of debts defaulting will impact the banks. Perhaps Fifth third bank and Huntington banks will go to 50 cents in this once in a lifetime opportunity. Maybe I am dreaming.
Anyway, even if this crisis is not here, US companies are highly overvalued and Singapore stocks are undervalued. The tables could be turned onced the tide has turned. Let us see what will happen next. I will choose to be with the financially strong rather than with the weak.
Thursday, December 12, 2019
Many thoughts
Hi there,
Welcome back to my blog again after a long break. I have thousands of thoughts in my mind. Acutally, my emotions and thoughts are mixed up as i wrote this blog. The reason why i am writing this blog is because i need a place to sort, organise and crystallise my thoughts on life and investment.
Yesterday, i looked through some stocks like FITB and HBAN and they trade at US$30 and U$15 and no insiders has bought them recently. Stocks like Dairy Farm and Hong Kong Land trade at US$5 and the balance sheet has worsened since the past 5 years because of huge debt and less cash. It is definitely a no buy. For stocks like A-Sonic, it went up from 22 cents to 53 cents due to good dividend and the cash pile is 33 cents per share. Alas, I did not buy this stock because I did not think well of the stock because of its low profit growth and prospects. Well, every stock has its day. I really should kick myself for not buying this because I spotted this stock in september 2019 and say it is a good buy but i did not act on my analysis. Aiyo.
Well, we got to find another stock like A-Sonic. Our goal now is to turn our investment into $700,000.
Welcome back to my blog again after a long break. I have thousands of thoughts in my mind. Acutally, my emotions and thoughts are mixed up as i wrote this blog. The reason why i am writing this blog is because i need a place to sort, organise and crystallise my thoughts on life and investment.
Yesterday, i looked through some stocks like FITB and HBAN and they trade at US$30 and U$15 and no insiders has bought them recently. Stocks like Dairy Farm and Hong Kong Land trade at US$5 and the balance sheet has worsened since the past 5 years because of huge debt and less cash. It is definitely a no buy. For stocks like A-Sonic, it went up from 22 cents to 53 cents due to good dividend and the cash pile is 33 cents per share. Alas, I did not buy this stock because I did not think well of the stock because of its low profit growth and prospects. Well, every stock has its day. I really should kick myself for not buying this because I spotted this stock in september 2019 and say it is a good buy but i did not act on my analysis. Aiyo.
Well, we got to find another stock like A-Sonic. Our goal now is to turn our investment into $700,000.
Monday, August 5, 2013
Children clinic
I saw two well-dolled up mothers at a recent visit to a baby/children clinic. Some of the things that I noticed about them are:
For the first lady:
1) Her face has make-up with mascara
2) She carried a Prada bag
3) Her fingernails are well-done up with shiny paint
4) She seemed to be in her twenties and her hubby is in his 30s-40s.
For the second lady:
1) Her face is also well-make up
2) She wears a white translucent T-shirt that shows her bra colour
3) Her legs have wounds or bruises from injuries(maybe from riding motorbike)
4) She has a maid
These observations point to extravagance. I wonder how much their respective husband is spending on her handbag, her fingernails and the maid etc... What is their top priority? Is it the children, handbag, fingernail, make-up or fun?
For the first lady:
1) Her face has make-up with mascara
2) She carried a Prada bag
3) Her fingernails are well-done up with shiny paint
4) She seemed to be in her twenties and her hubby is in his 30s-40s.
For the second lady:
1) Her face is also well-make up
2) She wears a white translucent T-shirt that shows her bra colour
3) Her legs have wounds or bruises from injuries(maybe from riding motorbike)
4) She has a maid
These observations point to extravagance. I wonder how much their respective husband is spending on her handbag, her fingernails and the maid etc... What is their top priority? Is it the children, handbag, fingernail, make-up or fun?
Friday, June 28, 2013
Children – a lifetime of liabilities or Assets?
A recent incident at a playground reminded me that children can be an asset or liability. This is what happens:
About a month ago, my 2-year-old son and I met two friendly and caring children, 7-11 years old (oversea Indian based on their accent). We were at a fitness corner for adults and these two Indian children came along and asked me how old is my son and what his name is. They even cautioned my son to be careful when using this fitness equipment. I was very impressed with their upbringing and friendliness. I thought these two Indian children will go far with this attitude in life. Their parents did bring them up well.
About a week ago, at the same fitness corner, my son and I met two unfriendly and malicious children, 4-5 years old (Chinese). What happened was this: first, they glared at us, then they insulted us with words like “baby goes home”, and even wanted to throw water at us. I suspect, they would have thrown water if I was not there. Next, one of them wanted to sit on a fitness station that my son was using. As my son refused to get up, he even shows a kicking action. (I suspect he would kick my son if I was not there). I intervened by shouting “wait!” Lastly, a black girl about age 4-5 years old came along. She climbed up the fitness station with her bare hands, and the 2 malicious children upon seeing this, tried to make her fall down by hitting her hands or feet. Thankfully, she held on. Once again, she was insulted by the two children with words like “baby go home”. The black girl had enough of this insults and pointed and shouted back at the rude boy. The boy pointed and shouted back at the black girl. Luckily, the girl’s mother called her back. I am sure the mum saw the quarrel but she chose to ask her to leave. I am disgusted of this two boy’s attitude and their malice. The girl, I am impressed with her mum. She chose to let it go and get her child to focus on something else.
Well, children can be an asset or liability. It all depends on their parents’ upbringing. Recently, we heard that there is a stabbing incident at Orchard Cineleisure. Will these two malicious boys be one of the fatalities in future? I am worried for them in future. Will they become a liability or asset of their parent, family and our country?
About a month ago, my 2-year-old son and I met two friendly and caring children, 7-11 years old (oversea Indian based on their accent). We were at a fitness corner for adults and these two Indian children came along and asked me how old is my son and what his name is. They even cautioned my son to be careful when using this fitness equipment. I was very impressed with their upbringing and friendliness. I thought these two Indian children will go far with this attitude in life. Their parents did bring them up well.
About a week ago, at the same fitness corner, my son and I met two unfriendly and malicious children, 4-5 years old (Chinese). What happened was this: first, they glared at us, then they insulted us with words like “baby goes home”, and even wanted to throw water at us. I suspect, they would have thrown water if I was not there. Next, one of them wanted to sit on a fitness station that my son was using. As my son refused to get up, he even shows a kicking action. (I suspect he would kick my son if I was not there). I intervened by shouting “wait!” Lastly, a black girl about age 4-5 years old came along. She climbed up the fitness station with her bare hands, and the 2 malicious children upon seeing this, tried to make her fall down by hitting her hands or feet. Thankfully, she held on. Once again, she was insulted by the two children with words like “baby go home”. The black girl had enough of this insults and pointed and shouted back at the rude boy. The boy pointed and shouted back at the black girl. Luckily, the girl’s mother called her back. I am sure the mum saw the quarrel but she chose to ask her to leave. I am disgusted of this two boy’s attitude and their malice. The girl, I am impressed with her mum. She chose to let it go and get her child to focus on something else.
Well, children can be an asset or liability. It all depends on their parents’ upbringing. Recently, we heard that there is a stabbing incident at Orchard Cineleisure. Will these two malicious boys be one of the fatalities in future? I am worried for them in future. Will they become a liability or asset of their parent, family and our country?
Monday, June 17, 2013
Opportunities many missed
In life, we will come across many opportunities we ignore, neglect or do not know, till it is too late.
For my friend, Mr Weak, he does meet opportunities like a good girl, a good job in a rising industry etc… but he chose to drive them away. For the girl, she helped him to mend his clothes, which is a rare feat in Singapore today. He chose to drive her away by bringing a china girlfriend home. He has a good job in a shipping industry in year 2003. At that time, shipping is slowly turning around. Too bad, my friend did not stay around to enjoy the fruits.
I can go on to talk about many others I know, but I leave it to you to look at your own friends and your own experience. In life, treasure the opportunities that we come across daily for we may never stumble upon it again.
For my friend, Mr Weak, he does meet opportunities like a good girl, a good job in a rising industry etc… but he chose to drive them away. For the girl, she helped him to mend his clothes, which is a rare feat in Singapore today. He chose to drive her away by bringing a china girlfriend home. He has a good job in a shipping industry in year 2003. At that time, shipping is slowly turning around. Too bad, my friend did not stay around to enjoy the fruits.
I can go on to talk about many others I know, but I leave it to you to look at your own friends and your own experience. In life, treasure the opportunities that we come across daily for we may never stumble upon it again.
Is it worth it?
In Singapore, we see huge price difference in houses, cars, food, etc… Undiscerning investors or buyers are paying for features or things that they may not need but yet they paid.
Today, let us take a look at cooked food. At the lowest end, we have the humble mixed vegetable stall at coffeeshop selling at $3.20 - $3.50 for a meat and 2 vegetable plus rice. Chicken rice is sold at $3.50 too. In a hotel, similar chicken rice or mixed rice will cost $10 and above. Is it worth paying 3 times more for a similar dish with better taste, service and good ambience? Personally, I don’t think it is worth it. The coffeeshop mixed rice is not too bad after all. Many men will go if the hotel staff is a pretty woman. Well, I chose not to.
In laptops, computers, we see this situation as well. The lowest end laptop cost $500 at a sale. The highest end that is super thin cost $2,000 onwards. This is 4 times more in price for slight improvement in performance and weight.
Car prices fluctuate greatly due to the COE prices. 3 years ago, it may cost $60,000 for a brand new Toyota. The new BMW then may cost $200,000. Please note that the $200,000 BMW can only sit 5 adults comfortably. It is not as if it can sit 15 persons or can run 3 times faster. Which is worth it? Though, I love BMW cars, I think the Toyota is more value for money than BMW. Also the extra road tax, maintenance and petrol dollars make me cringe.
In housing market, this is evident too. A 1,000 square feet apartment in Sentosa cost $2 Million. A similar unit in Paya lebar cost only $1 Million. Is the scenary in Sentosa 2 times more beautiful or the air 2 times more fragrant? I doubt so. Investors or buyers are again paying millions this time for some features that they do not need or for their ego.
It is your choice.
Today, let us take a look at cooked food. At the lowest end, we have the humble mixed vegetable stall at coffeeshop selling at $3.20 - $3.50 for a meat and 2 vegetable plus rice. Chicken rice is sold at $3.50 too. In a hotel, similar chicken rice or mixed rice will cost $10 and above. Is it worth paying 3 times more for a similar dish with better taste, service and good ambience? Personally, I don’t think it is worth it. The coffeeshop mixed rice is not too bad after all. Many men will go if the hotel staff is a pretty woman. Well, I chose not to.
In laptops, computers, we see this situation as well. The lowest end laptop cost $500 at a sale. The highest end that is super thin cost $2,000 onwards. This is 4 times more in price for slight improvement in performance and weight.
Car prices fluctuate greatly due to the COE prices. 3 years ago, it may cost $60,000 for a brand new Toyota. The new BMW then may cost $200,000. Please note that the $200,000 BMW can only sit 5 adults comfortably. It is not as if it can sit 15 persons or can run 3 times faster. Which is worth it? Though, I love BMW cars, I think the Toyota is more value for money than BMW. Also the extra road tax, maintenance and petrol dollars make me cringe.
In housing market, this is evident too. A 1,000 square feet apartment in Sentosa cost $2 Million. A similar unit in Paya lebar cost only $1 Million. Is the scenary in Sentosa 2 times more beautiful or the air 2 times more fragrant? I doubt so. Investors or buyers are again paying millions this time for some features that they do not need or for their ego.
It is your choice.
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