By FFN (guest contributor)
How do you find new companies that might be ten baggers in the future or the next Google or Apple? After several years of investing, I have discovered a few good avenues to get to know about new promising stocks.
One way is to read lots of books and magazines. By reading books, I got to learn more about many American companies such as Coca-Cola, Procter & Gamble, J&J, etc. From local magazines such as The Edge and the now-defunct Pulses, I came to know about local stocks. I got to know about Super Group when I was reading an article in the Pulses magazine. Super Group is the manufacturer of Super Coffee and a few other ready-to-drink beverages.
Attend talks and workshops
You can also get to know about stocks from free talks and workshops conducted by various training organizations. You can just attend the free talks and workshops to get to know about new companies. You can choose not to attend their paid workshops they will promote if you don’t like it. I got to know about Asia Pacific Breweries (APB) through one of these free workshops. APB is the maker of the famous Tiger Beer and other alcoholic drinks.
Learn from other people
Friends, family members and relatives can lead you into new companies too. During a normal conversation, your friend might say that he drinks a particular brand of chicken essence every morning and he feels energetic throughout the day. It turns out that the brand he likes is Brand’s Chicken Essence. The manufacturer of this is Cerebos Pacific.
I discovered many companies from forums such as the Valuebuddies forum. I got to know companies like Kingsmen, Vicom, Hour Glass, ARA, Adampak and many more from these forums.
You can also get to know new companies through your own research through the SGX website, Shareinvestor or through your broker’s tools. In Shareinvestor, I would sort the companies according to different sectors and look into the best companies in these sectors by filtering these companies according to ROE, net margins, etc. You can do these filtering from your broker’s website. My broker, DBS Vickers, has such a function.
One of my favourite ways to discover companies is by daily observations. I discovered OKP when I was in my uncle’s car and we were driving along Central Expressway (CTE). CTE was undergoing road widening and I saw concrete blocks lining the roads with the acronym “OKP” stamped on all of them. Furthermore, I discover companies when I buy particular products and look at the manufacturer. I then find out if these companies are listed.
Other avenues I find new investment ideas will be through reading the finance section of newspapers, reading financial news online and watching TV shows like Money Mind, The Suze Orman show, etc.
I have saved the best way for the last. The best way to get to know companies is to look at yourself. What are your interests and hobbies? Which industry do you work in? Which industry did you work in previously? What are the industries you understand? What are the things you use daily?
Do you take the train to work every day? If you do, you can look into SMRT. If you are interested in aircraft and work in the aircraft industry, SIA Engineering Company is a good local company to look into. If you are working in the healthcare sector, you can research into Raffles Medical. By looking at stocks listed in the industry you work in, you will have an upper-hand as you have an “insider look” that analysts or other investors don’t have access to.
A point to note is that not all the companies you get from avenues such as forums, magazines and books are fundamentally strong. You need to exercise independent thinking and research further into these companies yourself before investing your money into these companies. Happy hunting!
By guest contributor FFN, an avid investor who has completed the Associate Financial Planner course, and who blogs at A Journey Towards Financial Freedom. Posted via www.MoneyMatters.sg, your guide on how to make more money, save smarter, invest intelligently, and enjoy your money like a pro. Click here to get our free report on what you must know about financial freedom.