Watching more than 250 stocks will just stress you out and prevent you from managing your portfolio well. So here are things to consider before selecting stocks.
NOTE: This article is for investors who will stay in the stock market for the long haul.
1. The government
The government is one of the biggest sources of cash for our country, this means that you need to follow the direction where the current Administration is going. Since the government has no problem raising funds it would have no problem bringing projects to pass. In addition, the rating of the Philippine economy has been raised to " investment-grade" this means more foreign companies and investors will be investing in our country, this rating also allows us to borrow at a much lower rate than then what we did years ago. The current Administration is pushing for increased infrastructure thus more roads bridges buildings and airports would be built under this leadership. That's why it's always a good idea to follow the government's Private-Public-Partnerships. For more information about bidding and project awarding go to www.ppp.gov.ph.
Taking surroundings into account means looking at where the economy is going. When 2013 closed, the Philippine economy hit 7.2% GDP growth that placed it as the second fastest growing economy in Asia(second only to China) . And since 2012, we've never had a GDP growth that was lower than 6.3%. These numbers indicate that our economy is no fluke.
A consumption-driven economy insulate it from any external shocks that may come. Other countries have export-driven which are too reliant on the economies of their trading partners to do well. If a recession hits any of their trading partners, their economies will suffer too.
Since I know that consumption plays a large part in our economy all I need to do is add consumption related stocks to my portfolio these are some examples: JFC, RRHA, URC, PGOLD,SMPH.
OFW remittance in the BPO sector.
10% of our economy is driven by the OFW remittances and the other 10% by the BPO sector. People who receive remittances and people who work under the BPO sector are those who spend more and consumer as more cash in is made available to them. I believe that both of these sectors will increase our country's earnings both in the financial and real estate sectors. From a business point of view, there are a lot of BPO companies that would love to set up shop here and the only limitation is there's isn't enough space at the moment to house BPO companies. This is where companies like Robinson's Land Corporation (RLC), Megaworld (MEG) and Ayaland (ALI) and other property development companies can fill the backlog of office space for the BPO companies. Along with this is the growth of the financial sector since people will want to have their own houses cars start their own businesses etc.. the number of people applying for a loan will also increase.
3. The company.
What to buy? Take these into consideration first before buying a stock.
1. Is the company managed well? One of the most important things to check for is the track record of the company's leaders. A good track record of leadership in their previous companies is a positive indicator. Another thing that should inspire confidence is whether the majority of the leaders including the CEO, own significant shares in the company. For me the leaders should put their money where their mouths are.
2. The company is transparent in its disclosure of data and financial information.
3. Know if the company makes money or not.
4. Is the company a market leader? Like Jollibee or Coke. These companies are very hard to beat.
The company should be at least 15% undervalued.
Summing it all up.
You need to have a portfolio that you think:
* fits the plans of the government
* takes part in our growing economy
* is fundamentally sound and growing
* is at least 15% undervalued
Thanks for reading don't forget to hit like. Peace!