Here's a view that I like to look at when I invest into my companies.
Fundamentally, I find myself believing it hard for many of the companies today to exist 10 years into the future. IF they are to exist 10 years later, per my time horizon for investing in stocks, they will have to have certain identifying factors to compel me to make a long term purchase into them.
Here are some of my reasoning when looking at stocks right now. For this, I am excluding my purely value plays into some of the smaller stocks in my portfolio, and will be talking about my stock purchases which I will plan to add into going further.
1.) Possible growths with technology
Some of my key purchases now are into companies that are quite large but yet still remain nimble in their willingness to invest into R&D. Alibaba, for example, is a company that I love, coming from a logistics background. Their foray into technologies that encompass the newer generations' forms of consumerism, including buying online, deliveries, e-payments, and also the underlying technology (cloud as a good example) is one key reason why I am buying into them. The company itself has a sound and great business model, but they aren't afraid to dig into their coffers to invest into newer industries.
Another great example of this is my two purchases into Daimler and Alphabet. Alphabet is currently one of the companies most ahead with their autonomous vehicle technology, and so is Daimler. These two companies, along with Alibaba, are all companies that are doing great right now but have invested heavily in not just being relevant, but keeping ahead. Daimler has also collaborated with Baidu on their autonomous technologies, and I am looking forward to the fruit this bears, while their current business models still bring in tons of money.
2.) Value and Growth at the same time
Some people might argue that a company like Alphabet may be overvalued and not in line with the traditional value mindset. My reasoning against this is that the current business world does not allow for competition amongst companies as much anymore. We are seeing consolidations and huge purchases by technology companies, and they are no longer just going into tech ideas. While the stock market may at times be overheated due to people buying tech stocks, the reasoning is quite simple to me why I should buy into them, and keep them for the long run. Companies like Alphabet, Alibaba have huge moats that protect them from any temporary setbacks, and their technological advantage allows them to hold near monopolistic grips on their industries ( who uses yahoo anymore?) In my opinion, this goes fairly well in hand with the idea of wonderful companies at fair prices. I don't care if the stock market is going to price them high today and price them low tomorrow. These companies have huge moats, will be around for years to come, and most importantly, hire some of the smartest people in the world. These assets more than justify the slightly overvalued prices, and if one looks at a 10 year window, more than covers the margin of safety. As these companies continue to grow and their free cash flows increase, eventually the companies will start providing dividends. I see them less as growth stocks as much as facing the reality they are going to be around for a long, long time.
3.) Old time players stepping on potential goldmines
Some of the other companies I buy may be much more simpler and familiar to the Singaporean audience. I made two stock purchases into Daimler and Singtel. While Daimler is not a SG company, the mercedes brand is one known by all. So is Singtel. These two companies are companies that have established their roots for a long while, and have been in a mature industry. However, I like the two companies' ventures into future tech, while still providing a steady dividend.
Daimler's foray into autonomous vehicles and electric vehicles, especially their trucks, are what I love about this company, in spite of their stock prices tanking recently. They are not afraid to invest heavily while being an old timer (what with mercedes being the first automobile created and all).
So is Singtel, and their foray into 5G. 5G is what will connect the autonomous vehicles to the Siris and Cortanas, and will be the start of what connects the big data collection possible to run AI with. Singapore's smart nation will be what allows Singapore to stay ahead, and Singtel and 5G will be the support base.
Of course, the above are not just what I look into when investing in a stock, but they do factor heavily into me making a decision, post-financial statements.
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