18 Feb 2010

Value vs Growth stocks

Growth stocks are those with increasing sales, profit, EPS, ROE and rising share price. The idea here is to identify these proven stocks and buy into them when they are already on the way up. My growth stocks in Thailand: KBANK, LPN, PTTCH. KBANK and PTTCH i expect to pay good dividends too.

Value stocks are 'bargains' stocks with low prices that are strong fundamentally but are currently undervalued for whatever reason, you buy at the low price and hope they increase when the rest of the market catches up with your brilliance by seeing what a great stock it actually is.

My main value stock is Thai airways (THAI)- i just bought it- its at a low price historically and i see the new CEO as already making some very good decisions to turn the company around and i bet that tourism picks up. Another value stock that i think could be on the verge of increasing is TTA shipping- it recently dropped 20% in price but has good cash in hand and is undervalued i think (price to book value looks good) - (but there is likely to be oversupply in shipping capacity globally later this year so i think the time to buy is now - there may be an upswing in price in the next 1-3 months (before oversupply of shipping capacity hits the market) as china may increase its iron ore imports and if Greece is bailed out there may be a general bullish sentiment that lifts shipping trade. The Baltic Dry Index which measures the price of shipping goods also increased by 2% today making TTA (a shipping company) more likely to increase.

The key to making it work in stock trading- i think- i hope -is to know before hand when you want to sell....so...my rule is if a stock increases 5-6 % i sell..then if the stock increases further by another 2% i buy into it again hoping it will increase further...if not then i buy into the next stock on my watch list . I figure a 5% return is pretty good these days. Both my PTTCH and LPN stocks increased 5% in one day soon after i bought them last month. At the time though (before i had come up with my sell room) i dithered and they ended up dropping and losing that 5% in less than a day!..so i lost out...

My final stock is PTL- interestingly this came up as a pick using both value and growth criteria, so i bought it to see if it has some extra mojo because of that.

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