Indexing is out... stock picking in
August 2nd, 2020
⏰ 1 minute read
⏰ 1 minute read
Sales
The 2Q results are flooding out; not all yet, but many. Our main focus is on the sales growth. Everything begins with sales. The economy is sales & sales growth drives the cashflow of the companies which is ultimately used to pay to the equity investors. Sales was likely very weak in be 2Q... but just how weak was it...
Imports
We had suggested before that sales growth follows extremely closely the growth in imports. This is not surprising as imports are the best measure of the strength of the domestic economy & most companies sell domestically. Imports which we already had up to June were predicting -13% growth for sales. So far the average sales growth is -10%, almost perfect.
Top 10
We cover just over half of the top 10 stocks measured by market capitalization & so far their sales growth is much weaker than the average. The 4 for which we already have results have an average sales growth in the 2Q of -15%. All of them are negative with the best being UNVR at -2%; the weakest BBCA, -23%.
Indexing is out
To some extent this below average performance is having an impact. Not on BBCA which has increased it’s share of the market from just over 10% a year ago to just over 12% now: make of that what you will. But the share of the top 10 stocks is dropping from 48% of the market a year ago to 46% now.
Stock picking, in
So is there anything doing well? Yes there is & so far what’s doing well is matching with our previous ideas. The fastest growing stocks are telcos & commodities (palm oil & metals). The telcos are growing an average +27% although only 2 reported . Commodities are growing +11%;
combined they’re +14%. It’s time for a big switch.
The 2Q results are flooding out; not all yet, but many. Our main focus is on the sales growth. Everything begins with sales. The economy is sales & sales growth drives the cashflow of the companies which is ultimately used to pay to the equity investors. Sales was likely very weak in be 2Q... but just how weak was it...
Imports
We had suggested before that sales growth follows extremely closely the growth in imports. This is not surprising as imports are the best measure of the strength of the domestic economy & most companies sell domestically. Imports which we already had up to June were predicting -13% growth for sales. So far the average sales growth is -10%, almost perfect.
Top 10
We cover just over half of the top 10 stocks measured by market capitalization & so far their sales growth is much weaker than the average. The 4 for which we already have results have an average sales growth in the 2Q of -15%. All of them are negative with the best being UNVR at -2%; the weakest BBCA, -23%.
Indexing is out
To some extent this below average performance is having an impact. Not on BBCA which has increased it’s share of the market from just over 10% a year ago to just over 12% now: make of that what you will. But the share of the top 10 stocks is dropping from 48% of the market a year ago to 46% now.
Stock picking, in
So is there anything doing well? Yes there is & so far what’s doing well is matching with our previous ideas. The fastest growing stocks are telcos & commodities (palm oil & metals). The telcos are growing an average +27% although only 2 reported . Commodities are growing +11%;
combined they’re +14%. It’s time for a big switch.
Now you need to know which stock to buy.. Sharpfokus Saham, our 100 stock research is here
