vrijdag 13 juni 2014

Stock Screener: Take Three: Tai Cheung Holdings

Remember my post on KYN and my post on SIMO? The stock has gone up 6% and the other stock has gone up 15% since we bought it and now it is time to move on.

Track record 2-0.

If I don't have any ideas anymore what to buy, I use the stock screener.

What you want to do is filter on 4 attributes: market cap, P/E, dividend yield and percentage change.

1) Market Cap: do not choose small companies as they are mostly fraudulent or don't have sustainable earnings. Don't choose big companies because these are not volatile enough to get fast profits from. I'd filter between 200 million and 4 billion.

2) P/E ratio: choose the companies with the lowest P/E ratio, these companies are dirt cheap while still having earnings. Cheap is below P/E of 5. But do not choose below P/E of 2 because those are mostly companies that are going bankrupt or have bad growth.

3) Dividend yield: always choose companies that have dividends, because these companies have real earnings and can prove they have sustainable earnings to reward investors. The higher the better of course, but don't push it above 7% as those companies probably don't have the money to pay out dividends on a regular basis. I'd go for companies with dividends between 3% and 7%.

4) Volatility: don't choose companies that are so volatile. Maximum year over year change should be between the 20% range.



We use the exact same parameters as above.

And we find that there are some candidates in the real estate sector. Everybody is bearish real estate in China, but that's a contrarian indicator to me:

- Xinyuan Real Estate Co., Ltd. (ADR) is Chinese real estate, and we know that there is a risk to invest in Chinese real estate, so I wouldn't choose for this investment. I would rather look at Hong Kong.

- Tai Cheung Holdings has a pretty nice and stable dividend of 5%, which you won't get in U.S. treasuries. Hong Kong real estate will continue to flourish. I see this holding is investing in Tuen Mun, which is a place many mainland Chinese people buy real estate in, because it is very near China. It is also below book value. Good candidate so I will choose it. Look for the symbol:

HKG:0088 or TAICY.

Let's keep this stock screener thing going and see if this isn't the easiest way to make money! (without even knowing what the company is doing)

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