Saturday 28 April 2012

Investing in Silver

If you're looking for conventional recommendations, please do not look here. I can easily recommend blue chip counters that can give you 10 to 20 percent return easily. Don't get me wrong, but that's not called speculating anymore in my dictionary. Today, I'd like to shift focus to commodities. The commodity in focus is Silver. That's right, Argentum (Ag). 

If you follow the prices as closely as I have done, you should notice that Silver price moves in tandem with Gold price. 

Why you should buy Silver?

1. At its current price ($32 per ounce) it's still selling at a significant discount compared to prices of 1980s ($50 per ounce). If you factor in the depreciation of the value of the US dollar and our paper money, it should be much more in value. 

2. Silver has historically been sold at a 1:15 ratio to Gold's prices. At Gold's current price ($1650), Silver should sell at $110 per ounce. 

Finally, I'd wish for my readers to check this out. There's many resources around the web, but I find this the most accurate thus far. Happy weekend :)



Thursday 19 April 2012

RA (R & A Telecommunications Berhad)

Let me start by saying that my first recommendation would not be of speculative nature.
Let's take a look at R&A Telecommunications Berhad (RA).


Taking a look at RA's previous high, it is obvious there are plenty of upsides to it, from TA (Technical Analysis) point of view. If you take a closer look,


The "red" circle shows that MACD and MFI (Money Flow Index) is recovering. MFI is a better technical indicator compared to RSI in many cases, but that's a discussion for another time. So, from TA point of view, RA is a BUY.

From Fundamental Analysis (FA) perspective, it is worth noting that the company's profits have increased on an unprecedented trajectory.



Revenues 2011 versus 2010 was RM40.16mil  VS RM2.25mil
Net profit was RM8.116mil VS RM114,000 (increased over 7000%!!!!!)
So, is it a buy? I think it is. What say you?

Okay, let's not just stop at it, let us estimate the potential target price for this stock, shall we?

The total estimated market size for Telecommunications infrastructure and services in Malaysia is about RM4billion per year. If you google for recent write ups about R&A (there aren't many), they have talked about aiming for RM1billion in revenue in the next few years (25% of the market is not impossible, considering there aren't many competitors!)

The current RA net profit margin stands at about 20% of total revenues. Let's just say RA hits just RM500 million in revenues in 3 years time. And for discussion's sake, we take it that their net profit margin is 10% only. That's RM50 million in PAT (profit after tax)

Divided by 878 mil shares outstanding + 10% (of warrants) = 968 mil shares (if warrants converted)
That should bring RA's EPS (earning per share) to 5.16 cents. Apply a moderate P/E ratio of 10, should see the stock be valued at least 52 cents.

My target however, should see the stock trading at least around RM1.00

Finally, be reminded that telecommunications should see a spike in growth, and companies like DIGI, AXIATA, and MAXIS shall need to constantly upgrade their infrastructure because the industry is currently being driven by growth in data demand. Everyone's getting smartphones and the data demand is sure to surge. Invest in the company in which the products or services you use. A useful investment advice by Peter Lynch. I'm expecting RA to ride the high waves along with DIGI, AXIATA, and MAXIS. Not everyday you will come across such a chance in a lifetime! Ready to retire?

RA currently trades at 10 to 10.5 sen range.


Speculation Today: Introduction

Speculation today is intended to be the right site to go to for insights meant for contrarian speculators of stocks. Discussion will mostly revolve surrounding Malaysian listed stocks, with emphasis on current world market conditions, commodity prices and many other interrelated factors. Stay tuned.