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In the past few days, our market has rebounded substantially. Many investors are asking the perennial question: What can I buy?

Today, I like to share with you one of the ways that you can make full use of your broker's substantial resources to compile your own stock buy list. If you are not too savvy, you can work with your remisier to come up with this listing. I do this on a fortnightly basis for my clients when the market is relatively quiet but during the past few weeks, I have been updating my listing on a weekly basis. Go here for an example of Kenanga's Rating Summary dated 6 December 2019.
These are my steps to produce a listing of selected good stocks that have dropped substantially.
  1. Select all the stocks which meet your valuation parameters, be it PER or PB or DY.
  2. Compute the potential 1-year return for the stock by adding dividend yield (%) to Upside potential (%).
  3. Compare the closing price as per the Rating Summary (Mar 19) with prices 3-4 weeks ago (I chose Feb 27).
  4. For each sector, choose the top 1-2 losers.
  5. Remove those stocks that you don't like for whatever reason.

These are my 2-page listing (in 2 pages for easy referral) which I sent to my clients last weekend.
Table 1: My Selection of Kenanga's Rating Summary, page 1
Table 2: My Selection of Kenanga's Rating Summary, page 2

I have highlighted 4 columns to guide good stock selection- upside potential (blue), dividend yield (green), potential total return (pink) and percentage decline (yellow).

Stock ratings in Kenanga Research can be:

  • OP (Outperform)           Return of more than 10%
  • MP (Market-perform)    Return of between 5% and 10%
  • UP (Under-perform)       Return of less than 5%

As a remisier, I like to stay engaged with my clients during this challenging period. I'm always a cautiously optimistic person. I believe that a bear market is a good time to buy stocks. The problem is how to buy stocks at good prices when everyone around you is looking to sell off their stocks. In times like this, we have to remind ourselves that the exact opposite always happens in a bull market, when we would have a very difficult time selling because everyone else is so busy buying. So, my advice is to stay calm, stay engaged with the market and of course, stay at home when the Movement Control Order is enforced.

Good luck!

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