6 OCTOBER 2013
6 Stocks For The Modern Homemaker
By Simeon Ang
Remember Lynette Scavo from Desperate Housewives? That drama series was widely acclaimed in the US and received quite a bit of fanfare on Channel 5 before its first season was aired. Or perhaps, you might know Claire Dunphy of the sitcom, Modern Family? Winning various awards in the US as well although only aired on cable television here in Singapore due to mature themes.
These two characters, though from two different shows, have much in common. They are both full-time homemakers (well, at least for most of their air time). And being full-time homemakers, they have many concerns, not the least of it, financial security.
Part of this concern includes the ability to generate investment returns on capital. Therein lies the reason for this list. Although in this day and age, full time homemakers are hard to come by, the investment objectives and concerns of the stereotype can apply to various other people.
Hence, if you have the following concerns, this list of stocks is for YOU!
Insufficient time to monitor stocks and developments on a daily or even weekly basis
Medium-sized capital (about $10,000 investable cash)
High risk averseness (the need for capital preservation)
Require a mixture of dividends and gradual/slow capital appreciation
The ability to liquidate your holdings quickly and without much loss (during an emergency)
In our research to come up with these stocks, we have put the entire universe of stocks on the Singapore Exchange through a stringent and rigorous process of screening. Screening incorporated fundamental quantitative figures (such as dividend payout, earnings stability), fundamental qualitative factors (such as management characteristics, business risk factors), medium to long-term technical indicators (such as Relative Strength Index, MACD).
Thus, the following stocks have emerged from our screeners and represent, in our opinion, top stock picks for the modern homemaker.
CapitaCommercial Trust – CapitaLand Proxy
CapitaCommercial Trust nearly did not make it to our list due to a sharp drop in its distribution in one of the last five years (2008 to 2009), due possibly to the Great Recession. However, its saving grace mainly came from its very visible and very strong sponsor; CapitaLand. Other characteristics that made CapitaCommercial Trust stand out were:
Diverse tenant mix in its portfolio
Holds a 30 percent stake in a Malaysian REIT, Quill Capita Trust
Commercial properties have historically shown to be more resilient in times of uncertainty
Frasers Centrepoint Trust – Tapping On The Retail Wallet
Besides actually passing all our checks, Frasers Centrepoint Trust also had the following characteristics that made us certain it was a stock worthy of the list:
A strong sponsor in Fraser and Neave; which by the way is a household brand name.
Distribution has been growing for the past seven years
Invested in Malaysia through Hektar REIT (which is listed on the Kuala Lumpur Stock Exchange)
Taps into the retail industry of Singapore, in particular the heartlands, a historically resilient market.
Sheng Siong Group – Household Name And Staple
You probably have been living under a rock if you have not heard of Sheng Siong. The retail supermarket took Singapore by storm with its low prices and good quality consumer products back in 1995 (with the opening of its third supermarket at Woodlands). Since then the group has not blinked as it opened roughly 33 stores across Singapore. It has a few things going for it, namely:
It has literally no debt (paid off mostly from the proceeds from its IPO)
Earnings and revenue growth over the past few years
Committed to a payout ratio of 90 percent
Most transparent company award by SIAS
Consumer staples – hence an evergreen industry (demand will never die out)
SIA Engineering – Sunrise Industry As Budget Travel Becomes More Prevalent?
While its parent, Singapore Airlines, might be facing some problems with growth, SIA Engineering is certainly not. Besides boasting a robust balance sheet (very low debt to equity ratio of 0.00436), the company has seen its revenue and profits grow steadily through the past five years. SIA Engineering also stood out for its:
Strong backing through SIA who is also backed by Temasek Holdings (Singapore’s sovereign wealth fund)
It is committed to a dividend payout policy of 60-90 percent
It is well-placed to take advantage of increasingly affordable air travel
One of the main maintenance companies at Changi Airport, the company is likely to be a beneficiary of expansion plans (Project Jewel)
Sim Lian Group – Building Blocks Of Singapore
One of the mainstays of the local construction industry, Sim Lian Group boasts clients such as the Housing Development Board (that flat you’re living in now, could have been built by Sim Lian!), Keppel Land and Wing Tai. The company has since flourished into a property developer and has the following characteristics that might interest investors:
A1 status conferred by the Building and Construction Authority, essentially means that Sim Lian can build anything for the government
Bids for BTOs by the HDB, as well as private property development
Steady revenue and profit growth over the past five years
Dividends have been growing over the past 10 years
Singapore Press Holdings – More Than Just The National Press
Despite a relatively poor showing in its recent financial result release, Singapore Press Holdings (SPH) still has many things going on for it. No doubt, the decision to move away from its publication business mainstay was astute. Elsewhere, Singapore’s national press has the following characteristics that investors should take note of:
Strong management team (Lee Boon Yang, chairman and former minister), largest shareholder being the Lee Foundation
Products are widely distributed over Singapore
Long history of high dividend payout ratio
Although print publications are somewhat of a sunset industry, the company has been actively pursuing emedia as it’s next frontier (established a $100 million fund to invest)
As mentioned earlier, these six stocks have been put through rigorous and stringent screening. These six stocks have thus been proven to be at the very least, fundamentally sound.
This list is not static. We intend to update this list every quarter (after earnings season) and provide updates to readers about what stocks a modern homemaker would be interested to invest in.
Do subscribe to Tradeable to get updates on this list!
Publish date: 16/10/13