Disclaimer: Please note that this is not an advisory blog. Views expressed are strictly personal. It is meant for readers to do further research on their own. These are not buys or sells recommendations. Do contact and discuss with your dealer/remisier before trading. The risks are entirely your own.
The year of 2021 should present a good trading environment. Thanks to the unleashing of taps by almost every single government, the markets are still flushed with liquidity despite pockets of hardships in the real economy.
Timeline: Please note that I am taking a 12 month view with respect to the highlighted stocks below.
Risk/Reward: I have also taken into account the various risk profiles for investors. Assuming interest rates and 2.5% and an EPF return of 5%, we are all looking for returns above that. Naturally the higher the potential returns, so too will be their risk profile.
Entry Point: We assume current prices to project our upside. No point in getting a good stock that is fully priced in.
1) IF YOUARE LOOKING FOR A SAFE 25% for the year: GENM (4715) RM2.43
The losses accumulated over the past 12 months owing to the sporadic lockdowns are not significant compared to the established business model and infra that they have. At the end of the day, its a cultivated monopoly that will churn our profits. The impending vaccination should bring forth a back to normal situation by 2Q 2021. Looking at their 52 week high-low would give an idea of where we can get back to (1.83-3.12).
The bulk of their value is still from Resorts World. Their UK and USA ops are still in a cost cutting to turnaround stage, but nowhere as dire as the "luxury cruise" unit. RNAV is anywhere between RM4.50-4.90 which gives a lot of comfort as it is trading about 50%of its RNAV. Minimal downside.
Entry level RM2.43 x 1.25 = RM3.03. This level looks highly achievable sometime 2Q/3Q 2021. This is a must have especially if you are still long on glove counters. This would act as a balanced hedge for your portfolio.
2) IF YOU ARE LOOKING FOR A POTENTIAL MULTI-BAGGER (>200% to 300%) IN 2021: VIVOCOM (0069) RM0.96
Naturally we all want to have multi baggers. Last year saw plenty of them provided we held onto them for more than just a trade. Vivocom has a torrid rollercoaster ride back in November when they announced the asset injection. The shares rose from 45 sen to above RM2.00 in a matter of a couple of weeks. The selldown was just as severe. Judging from noises from the market, it was due to a clampdown by the authorities on shares which were rising unabated (via restrictions on PDTs).
Looking at the whole spectrum, if it was a pump and dump, it would have dwindled back to 45 sen or even below that, but it stayed firm around 75-85 sen with significant volume.
The other interesting thing is the rare self-imposed moratorium on the new shares being issued to the controlling shareholder for 3 years I think. That being the case, the free float can be said to be well controlled. Then you must consider how and why the shares would have been able to trade around 75-85 sen for the past few weeks (on decent volume). That smacks of collection, and at a level more than doubled where it began the rally back in early November.
The self imposed moratorium for 3 years would indicate that there should be significant corporate exercises in that period to bring about value and enthusiasm for the counter - otherwise, why do the SIM?
Investors had all the reason to sell following the torrid run up. The holding pattern at 75-85 sen indicates to me that something much deeper is brewing. Hence I think Vivocom has the best potential to be a multi bagger in 2021. Forget about gloves and vaccines linked stocks, that party has ended long ago.
The above is CDX, an indicator based on specific formula to detect Buyer and Seller momentum. Red means Buyer's momentum. Green means Seller's momentum.
Height of RED bar > 50% means BUYER is in control. i.e. preferable to have RED more than GREEN to go long. Green colour is Retailer (Avoid). Yellow is Hot Money (Fast in Fast Out.. can make money but need to be cautious). Red is Banker (Solid stock with potentially strong institutional support or smart money). Enough said.
3) IF YOU ARE LOOKING FOR A 30% SAFE RETURN for the year: ATAIMS (8176) RM2.25
One of the safer bets for the year. The estimated returns for the year would have been higher if their share did not garner so much new followers. Their 52 week high-low was 0.665-2.55, so as you can surmise at 2.25 currently its not that far from their 52 week high. The next time you see a big market correction, put ATAIMS as one of the stocks to grab when others are panicking. Imagine getting it below RM1.00.
The companies in Electronics Manufacturing Services (EMS). ATA’s positive prospects arise from: (i) it being the purest proxy to its key customer’s growth prospects being the largest contract manufacturer producing the broadest product range; (ii) its efforts towards being vertically integrated; (iii) its customer diversification opportunities ahead from the US-China trade war diversion supported by its modular expansion strategy. They have been moving up the competitive curve and value chain. Have a look at their revenue growth and net profit pattern.
2.25 x 1.3 = RM2.92 .. looks achievable this year.