Friday, June 19, 2015

Why Tom K does not invest in these two stocks?

One reader wrote to me asking me why I do not like stocks like BreadTalk and Q&M Dental stock which are expanding overseas. Well, this is just my personal opinion. Truth be told, with Singapore’s market being small, going overseas to gain a larger slice of the market is only necessary for a company to grow and for its stock to grow in value too (generally). Many of the blue-chip stocks which have done well were also early pioneers in going overseas. On the SGX, there are really many companies with an overseas portfolio or are gearing for it. However, for myself, I prefer a company to have a more established and leadership share in Singapore first before going overseas so that the company can ride on the strong foundation built in Singapore. I would also prefer that the company does not incur additional debt or turn to raising capital via rights issue to fund its overseas expansion.

For BreadTalk stock, I think that the F&B industry here in Singapore is rather competitive and there are also many competitors of bread chain stores selling nicer breads at lower prices springing up (at this juncture, I was reminded of the yummy butter bun from one such outlet). As for Q&M dental stock, while I note its increasing large “foothold” in Singapore, I am not too familiar with the dental industry in China. A stock of a similar industry (though different products) in Biosensors International Group as I have believed has expanded too fast and aggressively and one can note its share price now. Both of these two stocks have good potential and I do not like these stocks based on the share price now, I may like them when they trade at lower stock prices. Join the emailing list to receive regular Financial and Singapore stocks newsletters too! Like" me on Singapore Stocks Investing Facebook page to receive all posts on your Facebook as well as read more articles. Follow me on Twitter too.

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