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Friday , 19 August 2022

Buy the great brands

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Mervin Medel
Mervin Medelhttp://Philtimes.com.au
I am a stock market investor. I have been in the Philippine stock market since 2009. I read a lot about value investing and fundamental analysis. I am a big fan of the billionaire Warren Buffett. I use his investment philosophies as my style of investing.

By Mervin Medel

 

If you like the store, chances are you’ll love the stock. – Peter Lynch, former manager of Magellan Fund

 

Where do you go for a meal, McDo or Jollibee? If you like Chicken McDo or Chicken Joy, why not have the opportunity of owning the company as well? Yes, you read it right.

Where do you go to shop or relax, Trinoma, SM, or Robinsons? If you are a frequent of either of the three, why not be a business partner with the Ayalas, Sys, or Gokongweis, respectively, and have a slice of their profit? Yes, it’s possible.

All the companies mentioned are listed in the Philippine Stock Exchange, and so you can buy their shares. Jollibee has JFC as its ticker symbol; and McDo is under the holding company AGI (Alliance Global Group, Inc.).

Trinoma is under ALI (Ayala Land, Inc.), SM mall is under SMPH (SM Prime Holdings, Inc.), and Robinsons under RLC (Robinsons Land Corporation).

Indeed in the stock market, you are given the opportunity to own great companies! It sounds cool to be a business partner of the Ayalas right? That’s one of the great things in this field. Here are other things you need to think of:

Since most of us can’t buy McDo or Jollibee franchise, which by the way may range from P30 to P40 million (AU$767,680 to AU$1.02 million), why not buy its shares which may just cost you a few thousand pesos?

Also, since most of us don’t have the talent to run a business (I’m raising my hand), why not partner with those who have the aptitude of doing business. Why not partner with the Gokongweis, Ayalas, Sys, Consunjis, and the other big times?

You know what, they can multiply your money over time!

And since you are a shareholder, an owner, you are entitled of the companies’ profit. Here is the catch: you receive profits even if you are not involved in the daily operations of the said companies! How does that sound to you?

Finding excellent businesses includes finding strong brand names that own a piece of the customers' mind.

But wait!!!!! Liking the product is one thing, investing is another. And this second one is the most important. In the first you spend, in the second you profit (well, you should).

If in your analysis you find out, or if your broker says, that the company you like less profitable than its competitor, would you still buy its shares?

If you like it more to watch ABS-CBN’ Two Wives than GMA7’s Cooking With The Stars, does it mean you should buy shares of ABS than GMA7’s?

Not necessarily. This time you need to consider which one is more, or the most, profitable. So, you need to do some research from the company’s website or from broker. That’s how you should choose.

If you like Max’s Restaurant’s Fried Chicken (which I miss by the way) more than Jollibee’s Chicken Joy, would you still buy shares of Max’s (with ticker symbol MAXS) even if your research tells you that Jollibee is more profitable? It’s a bad investment strategy if you say yes.

It could happen that you like to go more to SM than Robinsons or Trinoma but invest in Robinsons anyway because from your analysis it is the most profitable of the three. There is no wrong with that.

It’s not a sin to buy the shares of the competitor as long as it is more profitable.

If your mobile number is Globe, it’s not wrong to buy shares of Smart (TEL) if in your analysis the latter is more profitable. Well if you do that, you might as well change your number to Smart so that your load consumption could boost TEL’s revenue further.

One more important thing. When you decide to entrust your money for example to the Gokongweis, don’t do trading; meaning, don’t buy and sell every now and then the shares you bought from Gokongwei’s companies.

If I were John Gokongwei, or the other big boys, I won’t be happy with a business partner who goes in and out of a deal. Trust him rather; he is a genius; and he has a good reputation of doing business.

So start with the companies you know, and perhaps you like. Then choose those which are like cash machines. That’s your chance of real success.

The only problem left is at what price you should buy these great stocks. This is a tricky topic, for my computation about a company’s worth is just an estimate. Well, even Warren Buffett admits that each analysis about the price of a stock may vary from one another.

But here’s what I will keep on repeating; buy during corrections, panic selling, bear markets, bad news, or recession, because most of these great stocks have their price tags marked down.

So, why own companies that you haven’t heard of? Why buy stocks that you don’t even know their products? Why purchase shares of a company you don’t even know whether it exists or not?

 

 

Disclaimer: Stocks that are mentioned are not recommendations for you to buy or sell them. They are mere examples to explain the writer’s points.

Mervin Medel
Mervin Medelhttp://Philtimes.com.au
I am a stock market investor. I have been in the Philippine stock market since 2009. I read a lot about value investing and fundamental analysis. I am a big fan of the billionaire Warren Buffett. I use his investment philosophies as my style of investing.

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