Comments for My Stocks Investing Journey

Comment on How do I value a stock? by yeo

yeo — Mon, 14 May 2012 15:11:42 +0000

Marubozu .. Thanks!!

Comment on How do I value a stock? by Marubozu

Marubozu — Sun, 13 May 2012 02:34:20 +0000

There is no right or wrong by using different numbers. All Stock Analysts make their estimation base on their understanding of the company and whether they believe the company story. You can use 10% or even lower growth rate if you don’t believe in AAPL story. If you believe AAPL can come out even better products in the next few years, you can even plug in the growth rate as high as 50%. It is all up to you. IV is all base on assumption and judgement. Everyone can become analyst thus I don’t take Analyst’s price target at the face value. I always look at their assumptions and evaluate whether those assumptions make sense to me.

Comment on How do I value a stock? by Marubozu

Marubozu — Sun, 13 May 2012 02:30:16 +0000

If you look at EPS growth rate at Reuters: 5 years growth rate for AAPL is 64.95, Industry is 12.44, Sector is 9.60.

You have to make your judgement what is the reasonable long term growth rate for AAPL. Personally I feel 10% is too low for AAPL because I don’t think AAPL grows “below” the Industry average of 12.44. 20% growth rate is too aggressive for Technology company for long term (reason: no technology product can last for 10 years) . Thus, I plug something in between which is 15% growth rate.

Comment on How do I value a stock? by yeo

yeo — Fri, 11 May 2012 15:37:38 +0000

Marubozu

IC. however, may I know how to calculate or plug in the number ’15%’? Is it base on some specific depreciation calculation from 20% ?

Comment on How do I value a stock? by Marubozu

Marubozu — Fri, 11 May 2012 14:37:57 +0000

Yeo,
The reason I split into 2 stages of growth rate is I don’t believe AAPL will grow at about 20% year over year for the next 10 years. AAPL should not have any problems growing at 20% for next 3 years because they still have iPad3, iPhone 4S, iPhone 5, Apple TV lining up for the impressive growth. However, there is no visibility beyond year 4 onwards and that’s why I cap the growth rate at 15%.

Some of the small companies can grow more than 50% in a year but it is unrealistic to assume 50% CAGR for the next 10 years. You can tweak your IV calculation to this method for small and fast growing company.

Marubozu

Comment on How do I value a stock? by yeo

yeo — Fri, 11 May 2012 11:05:48 +0000

Hi Marubozu

I saw your intrinsic-value (IV) posting for APPLE (AAPL) in http://mystocksinvesting.com/category/intrinsic-value/.

can i know how do u measure the 1-3 Years Cash Flow Growth Rate (CFGR) and 4-10 CFGR ? ( i mean what is the number of year-period to be taken in order to be applied for CAGR calculation for 1-3 years CFGR and 4-10 years CFGR).

qouted:
# Cash Flow Growth Rate (1-3 Years) = 19.35%
# Cash Flow Growth Rate (4-10 Years) = 15%

thanks again.

Comment on How do I select a stock? by yeo

yeo — Tue, 08 May 2012 15:03:19 +0000

Thanks Marubozu for your comments.

Comment on How do I select a stock? by Marubozu

Marubozu — Mon, 07 May 2012 13:58:55 +0000

Hi Yeo,
You can relax some of your selection criteria base on your risk appetite.
http://mystocksinvesting.com/lessons-learnt/stocks-selection-criteria/selection-criteria-checklist-financial-perspective/
Pay special attention of the Current Ratio (>1) and Operating Cash Flow (Positive). The company still can survive if they lose money but the company will go bankrupt if they do not have enough cash flow to run their operation.

Marubozu

Comment on How do I select a stock? by yeo

yeo — Mon, 07 May 2012 08:15:15 +0000

hi Marubozu

Thanks again.
Right, some of US stocks (mostly Warren Buffet’s selected stocks) fulfilled those critiria..

hence, in the situation of stocks in singapore, if we wanna to satisfy the ‘Value Investing’ Rules to Singapore stocks, may i know which Critiria or Fundamental Indicator that we should look at as Priority?

Comment on How do I select a stock? by Marubozu

Marubozu — Mon, 07 May 2012 07:26:32 +0000

Hi Yeo,
Welcome to STI! Yes, you are right that there are not many STI component stocks that pass the criteria. The Singapore Stock Market is just too small compared to US market. I suggest you take a look at US market and you can see the gems there.

There are some general rules like “Never Buy at High” or “Don’t Chase the Market” but it all depends on your risk appetite. Some people will tell you that “Buy Higher Sell Higher” or you still can make profit when you chase market. It is up to you to set your own “Die-die must follow rule”. You can also use the Intrinsic Value calculation to choose “BAD” companies so that to short the stock when the stock is over value.

My suggestion to you is to choose one method that suitable to you and help you to make money in the stock market. Other people method may not suitable to you because they have different risk appetite, holding power, different objective and different time frame.

Marubozu