Category: Money tips Release Date: 2007-03-03
Although the current policy side positive, but the market has not excited, this contrast reflects the investors in the stock reform of investment opportunities during the confusion. In fact, no matter how the market changes, good stocks to own their own investment value. This article will provide investors with a robust stock selection ideas: cash flow + dividend yield. - Editor
Cash flow + dividend yield: value investing pairs of Insurance
Cash flow is the financial guarantee, refers to the enterprises within a certain period of time the amount of cash inflows and outflows. We mainly study two indicators of free cash flow and operating cash flow. In addition to cash flow from operations refers to business investment and financing activities of all transactions and events other than the cash flow generated can be obtained directly from the company cash-flow statement. When the company continued to net cash inflow each year, indicating its operating condition; when companies of operating net cash outflows shows that enterprises are facing a deficit of financial position. The past three years, there are 718 listed companies could have an annual positive cash flow from operations.
Free cash expenditure is considered capital and cash flow after dividend distribution position. Commonly used formula is: Free Cash Flow = profit before tax + depreciation - capital expenditures. It can be used to reflect the business situation of enterprises that do not have to reinvest in the company to maintain the current growth rate of operating cash flow. Free cash flow is positive when long-time state enterprises can not only maintain the existing scale of operation, and can maintain a certain growth rate, along with the cash surplus, which is very beneficial to the development of enterprises. For investors, such enterprises are healthy growth, there may be substantial dividend income. When the long-term free cash flow is negative, the firm will be in trouble, expenses not return the original cash will soon be consumed.
Warren Buffett making stock investment selection and assessment, a very important indicator is the cash flow. In his view, only the cash flow growth, companies have the means to pay shareholders dividends, in order to ensure equity growth. Its use of the "shareholders surplus" is the company's net income plus depreciation, depletion, amortization costs, less capital expenditures and others for additional working capital. This method of calculation and the calculation of free cash flow, similar in essence.
Since many companies rely on equity financing to maintain the growth performance, therefore, free cash flow continued to be positive for listed companies is a very high demand. According to statistics, all A-share listed companies, in the past three positive annual free cash flow are only 186. Here, we relax the conditions for an appropriate, select the last three years, the arithmetic average of positive free cash flow per share of listed companies, there are 522 such companies.
Dividend yield is used to measure the return mechanism of listed companies, the most direct and objective benchmark. Generally considered that only the dividend yield is higher than the one-year deposit interest rate in order to meet the variety of psychological expectations of investors. If we can continue to dividends, and dividend yield higher than the one-year deposit interest rate, so that investors in the company is worth attention. According to statistics, over the past three years, insist on cash dividends each year, and the three-year average dividend yield is higher than the average one-year bank stocks are 140 (Note: The pre-tax dividend yield = Dividend per share / year ended December 31 prices, bank deposit interest rate hike in nearly three years, before and after the average of 2.07%).
Here, we choose the sample stocks, it is necessary to meet the operating cash flows three years are positive, three-year average free cash flow is positive, but also 3-year average dividend yield higher than bank interest rates on one-year stocks. In addition, we also take into account take into account growth, the sample shares of main business income of the past three years, annual growth rate of more than 10%, net annual growth rate of more than 15%. Meet the above conditions, the sample unit in 55.
Pilot Unit Quotes: The sample stocks Canglongwohu
Our proposal for "cash flow + dividend rate" of the stock picking new ideas, in the grasping hot stock split share structure reform, when the tactical significance.
Judging from the recent news side perspective, the second batch of pilot projects are broad in scope, program diversity, emphasizing representation of the characteristics of Sugu, repurchase canceled warrants may be used. Which is a common requirement is that several program performance of the company outstanding, a larger capital stock.
Through the "cash flow + dividend rate" elected by the 55 performance of the company as compared with excellent first quarter of 2005 the average earnings per share reached 0.16 yuan, much higher than the average of the two cities. Sample unit with plenty of cash flow, cash flow from operations per share by the end of 2004 the average level close to 1 yuan, asset-liability ratio on average only 36%, the company has the ability to repurchase. The proportion of the sample stocks of non-tradable shares on average 63%, the highest Yangzi Petrochemical, Shougang shares and other non-tradable shares account for nearly 85%, but also have the possibility of the first pilot. Because these companies themselves are good, the applicable programs are more selective than half of the companies stronger. Therefore, if investors want to take the second batch of pilot stocks of the opportunity to propose some individual stocks can choose from, both the performance of security, there are opportunities for short-term speculation.
With warrants, for example, the provision requiring the company warrants model three conditions are met, the sample stocks are in full compliance with 26 companies, including Baosteel, Shanghai Petrochemical, Yantian Port and so on, making it possible to solve through the share-warrants home. Yesterday, Handan Iron & Steel to issue the first notice of repurchase outstanding shares, with the same subject matter Lingyuan Iron, Hangzhou Iron and Steel shares worth Investors.
Comparing the performance of outstanding shares due to the sample, if the major shareholders equity ratio low, once the shares may be tradable, for the table is relatively dispersed shareholding company is concerned, in the future there will be controlling the fight. Such as the North in order to maintain high speed and large shareholders, controlling position, has recently purchased shares in the market. Other areas such as Erie shares, Yutong Bus, Angang, Foshan lighting in the future does not rule out the majority shareholder to purchase outstanding shares possible.
Semi-annual Quotes: Pre-increase shares ahead of an ambush
This sample of 55 stocks can also help investors to tap the opportunities for the upcoming semi-annual Quotes. This is concentrated in 55 stocks of basic iron and steel, transportation, automobile, electric power plate. According to statistics, the 55 stocks in the first quarter achieving an average net profit of 243.05 million yuan, up 25% over the same period last year, equivalent to 28% last year, there are 39 stocks achieved a quarter of the year on year growth, compared to most of the performance of listed companies about to enter the state of decline or stagnation, these stocks can maintain continued growth is very valuable.
Wuhan Steel shares, Angang, Guangdong Provincial Expressway Development, Bengang Steel Plates has released a mid-term Yejiyuzeng notice, of which Wuhan Steel shares increased 300% pre-, pre-Bengang Steel Plates by 130-160%.
Although the company did not release some of the pre-increase announcement, but its first-quarter revenues would have been the equivalent of more than 30% last year, so that interim results of the company's growth can be expected. If Chitianhua, in the first quarter profits equivalent to 40% last year, Chongqing Department Store, building stock, Xiamen port, Shanghai and the energy equivalent to last year's 35%. Recommendations focus on these stocks. However, the sample stocks in a quarter year on year decline in 16 short-term stocks should avoid, such as Ningbo Bird, the Rainbow has issued shares profit warning announcement, investors may temporarily sidelines.
Full Circulation is expected to: trace the trend of mainstream financial
June 8 of the massive Changyang, we believe that incremental funding large-scale intervention in the market is an important signal. Incremental funding approach will become the dominant market outlook Quotes. So, what section is the mainstream choice for incremental funding it? We think it is mainly the following three aspects.
Fully tradable shares under the advantages of an international valuation. Split share structure reform pilot projects already under way, optimistic and expected stock reform will be completed within a year or two. Therefore, this money come in, bound to full circulation of the eye to stock selection. Tradable in the stock of capital close to full circulation of the background, the international market on an investment point of reference, only in international comparison, have continued to have a valuation of stocks that have the advantage of investment value. Through the "cash flow + dividend rate" of 55 stocks selected dynamic price-earnings ratio of 13.22 times the average, while the current Hong Kong's Hang Seng Index constituent stocks and the U.S. Dow Jones index constituent stocks and Japanese longitude 225 index constituent stocks, the average price-earnings ratio in 16 -- 18 times higher than the international market compared to the 55 stocks in the underestimation of the level of the whole.
Performance against the risk of leading shares. Began in April last year, the macro-control is continuing, and the results from the third quarter of last year, began to appear, automobiles, building materials and other industries began to decline in performance, or even a loss this year is expected mid-term, there will be more industries and companies with performance turning point.在业绩可能整体滑坡的预期下，增量资金要尽可能降低风险，只能选择抵御系统性风险能力强的公司来投资，样本股基本符合这一需求? First, select the non-cyclical industry, all industries, including transportation, medicine, tourism, food and beverage, such as Yunnan Baiyao, Erie shares, Xiamen port in North China high-speed, etc.; 2 is the industry's decline in the leading companies, although the industry has risks, but leading companies have scale advantages, technology, able to cope with risk, or because of re-integration within the industry and re-grow talent. For example Chang'an Automobile, although the auto industry to face market shocks, competitive dilemma, but the company to rely on Ford background, the newly integrated Jiangling Motors, which expanded the company's market share in the micro-car market status will be raised.
The pursuit of a stable return on dividend stocks. 13th of this month, the Ministry of Finance decided that individual investors get dividends from listed companies, dividend income, temporarily reduced rate of 50% of the individuals included in taxable income, in accordance with the provisions of the existing taxable personal income tax law. Halved taxes on dividends would be greatly mobilized the insurance funds, pension funds, corporate annuities and other long-term funds into the market's enthusiasm. Sample of stocks in the 55 stocks in 2004, the average dividend rate of 4.27%, nearly twice the one-year deposit interest rate, this level of returns for many corporations is very attractive. Xinxing Ductile Iron Pipes, Tangganggufen, Shougang shares, Liaohe Oil Field in 2004, if the dividend rate to December 31, 2004 the closing price in excess of 8%. At the same time, these companies have free cash flow is positive, means that if the next few years to withhold investments, the company also still maintain a certain growth rate, there are financial rewards to shareholders.
In short, for both the normal cash flow as a support, and have a stable return on stocks is expected to be from a long-term strategic focus. While the short-term, may be aimed at semi-annual opportunity to split share structure reform pilot the opportunity to operate.
