Investing in Growth Stocks using CPF

The following is a guest post by Joe Ng Boon Leng. You may contact him by leaving your comments below. 

There are a total of 490 CPF stocks that can be purchased out of the 800 companies listed in SGX.  Obviously not all the stocks are suitable for our investment. We have to identity which are the growth stocks.

For growth stocks, it must meet a few criteria: The stocks are not volatile which means even when the market is booming, they do not move much; and its fundamentals are strong (strong cash flow, low debt, etc); its economic moat is wide (will not easy for the competitor to duplicate or cut the price for their success); and there is demand in the market.

I shall touch on 3 counters as they have fulfilled most of the criteria that I have mentioned above. I own them and have been receiving the dividend till today.

First is the Straits Times Index Exchange Traded Fund. This is a capitalization-weighted stock market index that is regarded as the benchmark index for the Singapore stock market. It consists of a pool of 30 stocks that are selected to track our market. It is reviewed quarterly to determine changes to the constituents. The prices never depend on an individual company’s performance. Rather, it depends on the market. You can get around 3% dividend yield annually with minimum risk. A cautionary word is not to buy the STI when it is at 52 weeks high, P/E ratio is above 15 or when the annual dividend yield is less than 3%.

Second is Capitaland Commercial Trust (CCT). The company owns a series of commercial properties in the prime locations of Singapore. Why I choose this? Being a commercial hub with scarce land resources, location at prime area commands a good rental. For past decade, CCT always performs better than the market occupancy rate. Its average dividend yield is above 5%. Having said that, you would still need to review its financial report quarterly for any changes. The stock is worth buying when the stock price is lower than NAV and debt ratio lower than 35%.

Third is the Parkway Life Reit (PLife REIT). The company invests in hospitals and nursing homes. They have properties in Singapore, Japan and Malaysia. With longer lifespan, demand for medical needs/care are far shooting upwards, the dividend yield on the average is 4%. The stock price is normally above the NAV and debt ratio is around 35%-40%. Consider to  buy the stock when it is at the lower end of 52 weeks price and there is no sudden increase in debt. Again, it is essential to review the quarterly report.

As the counters I recommended are more for dividend collection and long-term growth, please do not invest if it falls below the dividend yield I had cited.

Disclaimer: The above is only for educational purpose. Joe does not represent any company. Please invest at your own risk.

Notable Quotes from “Behind the Berkshire Hathaway Curtain”

“Behind the Berkshire Hathaway Curtain” is a book authored by Ronald Chan. He is also the author of “The Value Investors”, which I once reviewed.

In Behind the Berkshire Hathaway Curtain, Ronald interviewed many of the stewards of the companies owned by Berkshire Hathaway. The Chief Executives and the firms featured in the book include:

  • Cathy Baron-Tamraz from Business Wire
  • Randy Watson from Justin Brands
  • Stanford Lipsey from Buffalo News
  • Barry Tatelman from Jordan’s Furniture
  • Dennis Knautz from Acme Brick
  • Brad Kinstler from See’s Candies
  • Marla Gottschalk from The Pampered Chef
  • David Sokol from MidAmerican Energy
  • Walter Scott Jr. from MidAmerican Energy

Some of the remarkable quotes from the book are:

  • True leaders who have been tested do not need to show off their abilities or create deals and “noise” for their company. They are the ones with discipline, solid business principles and a sense of team spirit that benefits the whole company instead of themselves. – Cathy Baron-Tamraz
  • Hard work is always required to succeed, but being curious and adventurous enables you to challenge and surprise yourself. – Cathy Baron-Tamraz
  • We are given two eyes, two ears and one mouth, so we should always observe and listen, and talk only 20% of the time. – Randy Watson
  • One thing I’ve learnt is that people do not care what you know until they know that you care. – Randy Watson
  • My job is to make sure that I have the right people in the right place, and then I stay of their way. – Randy Watson
  • Truthful advertistments sometimes outsell those that are manipulative and inaccurate. – Barry Tatelman
  • Do the numbers tell you the whole story? Yes and no! They tell you how a business is being operated, but they don’t tell you how it should be operated. – Dennis Knautz
  • The only thing I could do was to keep my head down, check my ego at the door, and work extremely hard to prove that I was capable of leading. – David Sokol
  • Life to me is a journey, not a destination. – Walter Scott Jr.
  • When things change, change along with them. Apat! – Walter Scott Jr.

A common thread in the book was that hard work and integrity are paramount if one wants to succeed in life.

Some of the leaders have also said that Buffett’s focus on the long-term, instead of short-term profitability, really helps them to focus on building their businesses. Brad Kinstler of See’s Candies quipped, “Warren looks at the long-term picture. Because he does not put us in the position of needing to achieve consistent revenue and earnings growth in all economic environments, we can shift our attention to the long term”.

Let me sign off with my most favourite quote from the book:

“When my father, Edward, passed away in 1980, everybody in town came to his funeral to pay tribute. He died without an enemy and money can’t buy that. Perhaps the number of people who attend one’s funeral is a measurement of success.” – Barry Tatelman

“Invest Lah!” Has Hit the Major Bookstores!

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“Invest Lah! The Average Joe’s Guide to Investing” is now available at selected major bookstores. Currently, the books can be found at:

  • Borders – Westgate
  • Kinokuniya – Bugis
  • Times – Plaza Singapura and Paragon

More major bookstores, including Popular, will carry the books from this week onwards. For more information about the book, check out this page.

There is also a Facebook page dedicated to the book here. Do “like” us. Periodic updates on where to get the books and other informative videos and articles will be posted up on the page. A contest is also slated to run soon where you can win free goodies. Do keep a lookout for that.

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Invest Lah! The Average Joe’s Guide to Investing

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Have you read investing books thinking you would learn a thing or two, only to be confused with all the financial jargons? Would you like to know three locally listed companies that may make good investments? Do you want to know how to open a brokerage account so that you can purchase your first stock?

If the answers for all the above questions are a resounding “YES!”, you have to catch hold of the latest book to hit major bookstores in the new year!

“Invest Lah! The Average Joe’s Guide to Investing” is slated to make your moolah worth it. This book was written with the intention to be the ultimate go-to book for beginners to learn about investing in stocks, especially in Singapore. The authors wouldn’t be surprised that you love the book so much that you even hug it to sleep.

Topics covered in the book include:

  • Why invest?
  • Myths of investing
  • The concept of Prudent Investing
  • How to analyse a stock to invest in
  • How to read Financial Statements
  • How to read Annual Reports
  • Behavioural finance
  • Case studies of three companies listed in Singapore Exchange
  • Case study of a company that has been taken private
  • Investing in Straits Times Index Exchange Traded Funds
  • How to buy and sell shares in Singapore
  • Corporate actions for locally listed stocks
  • And many more!

Why wait? Grab hold of the book in early 2014, lah!

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Scuttlebutting At Chipotle and Whole Foods Market

Chipotle Mexican Grill and Whole Foods Market are listed in US and I had a chance to visit them in London, UK. Chipotle Mexican Grill is a chain of restaurants specializing in burritos and tacos. At the counter, the items that you can choose to be put in the burritos are lined up in trays (reminded me of Subway). The store was not that crowded at I went around 3pm, past lunchtime. If I had gone at lunchtime, maybe I could have seen more people dining there. The store I visited is very near Leicester Square (address: 92-93 St. Martin’s Lane London WC2N 4AP).

Whole Foods Market, which claims to be “America’s Healthiest Grocery Store”, is a store that sells organic food, among others. I like one of the concepts in Whole Foods Market where patrons can choose their own takeaway meals and pay a certain amount for every 100g. They have both salad selections and full-meal selections. They store was considerably crowded. The store I went to was at Piccadilly Circus (address: 20 Glasshouse St London W1B 5AR).

Below are some photos I took. The third photo shows the takeaway meals selection that I was talking about.

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Some Halloween fun:

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