Asked on 30 Nov 2019
Would you guys suggest buying now or waiting?
1) Revenues pretty stagnant
2) Earnings pretty stagnant
3) Low ROE of 6%
I will pass
Hey Gobenaath, despite everyone's opinions here, it is important to formulate your own opinion! One of the worst thing you can do to yourself is follow herd mentality.
Spend some time to read the company's websites, annual reports and do some valuation work on it.
Well the decision and the conviction has to ultimately come from yourself. You will have very different perspectives and suggestions from everyone, but the only suggestion you should follow is your own conviction.
I've made a few mistakes of just following and buying just because their track record is "good", and turns out the stocks went in the opposite direction. However, I believe if I have done my own research and due diligience, I won't even purchase the stock at that point in time.
Research more about the business - can it sustain in the long term? What is their P/E now? It is reasonable as compared to other competitors? What are their future growth plans?
Once you got that out, you will create a picture for yourself of the future of Wilmar, and that my friend, when you know if the current price is a deal or a "value-trap" for you. Go forth!
hard to argue with Ser Jing but I will go out on a limb here. Wilmar might not be a good buy... at any price...
It goes back to why do you need Wilmar in your portfolio? It is a commodity company but a diversified one. Most commodity just tend to trade
with the underlying commodity price anyway. But Wilmar being a diversified commodity player, its results is dependent on many commodity which might end up cancelling on another, making the earnings more unpredictable.
So for a company with not much control over its pricing and low growth and a high valuation, it seems there are so many better alternative out there. :p
Just like what Jonathan has shared, the company has low margins and ROE with high debt.
Would skip this company!
Before buying into any stocks, you must first really understand the business. Often times if you just follow others blindly, you will not know how to react when the stock price fall the next day.
When i 1st started out, i listen to one of my friend and invested into one company. Then after few weeks, the share price tank, i do not know how to react to it. I called my friend and ask what happened, he then told me the results was not good. Didn't beat the expectation. Then he said he sold it off. I blindly follow and sell it away and took in a loss of 25%.
Few months later i happen to check back at the stock price for that particular stock, it was trading at higher than the time i bought it. I was like, what happened?!
After went for few courses and start to learn investing, now then i realised we shouldn't listen to someone who himself do not have much knowledge in stock investing.
Must always have the understanding in the business before you start to invest in it so this will help you to sleep soundly without waking up middle of the night and panic when see the share price tanked.
Your question is deceptively difficult to answer, because a stock that is good for one portfolio may not make sense for another.
Wilmar's business deals with the production and/or distribution of palm oil, palm-oil-related consumer products, oil seeds and grain, and sugar. Even though its revenue is more than US$31 billion in the first 9 months of 2019 alone, its business still depends heavily on the prices of commodities - and prices of commodities are not something that any company has control over.
Given this knowledge, let's play around with three different scenarios.
In Scenario A, Wilmar would be the only company in your investment portfolio. Would you be comfortable, knowing that the company - as big as its revenue is - has not much control over the prices it can charge for its products?
In Scenario B, you are willing to allocate only a small piece of your portfolio to Wilmar. But this is a portfolio that's already full of companies whose business-health relies heavily on the movement of commodity prices that include palm oil, oilseeds, and sugar. In other words, the portfolio lives or dies with the movement in price of a handful of commodities. Would you be comfortable?
In Scenario C, you are willing to allocate only a small piece of your portfolio to Wilmar. And this portfolio is already fully stocked with companies that are backed by powerful long-term secular trends, strong ability to generate free cash flow, capable management teams, and robust balance sheets (these are unfortunately, traits that Wilmar do not excel in). Would you now be comfortable investing in Wilmar, if you had a view that palm oil and sugar prices would soar in the years ahead and benefit the company, while knowing full well that (a) predictions about commodity prices are really difficult to make, and (b) the gap between a positive macroeconomic trend and a company's stock price movement can be a mile wide?
Ultimately, only you can decide whether a company is a good buy.
Instead of reading anyone and everyone's answer, spend more quality time to understand the business model of Wilmar, alongside with its annual report. From there, it should give you some pretty clear indications on whether to buy or hold it.
In any case, I doubt you will trust a random opinion online right?
Here is everything about me and what I do best.
I might wait a little, recently Wilmar surged because of the news of an IPO spin off of a subsidary, however normally after this stock hype share prices may go down a little, about there should you consider, i will consider at 3.8X mark
Usually, I will look at the industry and business.
Is it heavily dependent on any commodity price? If yes, I might want to avoid this business altogether.