woensdag 29 april 2015

Stock screener: Take 6: XIN: Xinyuan Real Estate

Remember my post on KYN, SIMO, TAICYTYG, EWZ? All have been doing well. EWZ has given a handsome dividend while appreciating 10%, I'm amazed how well this stock screener idea works.

Track record 5-0.Time to move on.

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 our next winner is: Xinyuan Real Estate (XIN). Very nice earnings 20 million in the last quarter, which means a P/E of 5-6. Dividend is increasing in time, it is 6% now. Dividend is also stable, they started to pay out 3 years ago. Is trading below book ratio, probably because of the so called China real estate bust, which is totally bogus. I'm buying it. Technically, the stock is in break out phase. Let's go for 6-0.

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