What is a growth stock, a dividend stock and a defensive stock? These terms had often been used in various online articles and can be quite intimidating to investors. Understanding these terms is essential because you may want to buy stocks that fit into your investment strategies and temperament. In this article, I will attempt to explain these terms and use some SGX stocks as examples.
Many Singaporean investors will agree with me that investing in SGX stocks is not a walk in the park. Quite a number of local investors had lost their pants investing in Hyflux, Noble and Midas stocks. Then there were those investors who had lost their monies investing in oil and gas companies facing liquidation issues due to the meltdown of oil prices. And don’t even get me started on the thrashy S-chips that had caused plenty of heart pains for investors. On looking back, the past decade was certainly disaster after disaster for SGX stocks.
Given the spate of investment misadventures, investors can be forgiven for thinking that SGX stocks tend to generate poor returns. To this end, I beg to differ. Stock picking is both an art and science. Inevitably, you need to suffer losses before gaining enlightenment. SGX stocks offer plenty of opportunities to make money (and lose money), and it is only a matter of identifying the right stocks that suit your investment strategies. With this in mind, let’s take a look at some of the best and worst SGX stocks.
Roller coaster rides of growth stocks
Growth stocks are those which investors deem to have potential revenue or earning growth. Typically, the management of these companies will place revenue or earning growth as priority. Thus, growth stocks give little or no dividends because the management tend to reinvest the retained earnings into growing the company. SGX stocks that fall into this category include bank, technology and commodity.
Growth stocks are not for the faint-hearted due to their volatile price movements. Growth stocks tend to surge as their revenues or earnings increased. Thus, those who buy into growth stocks go for capital appreciation rather than dividends. Conversely, when these companies missed the growth forecasts, their share prices are likely to correct in value, potentially wiping out dividend returns that investors received previously.
Notable examples of growth stocks are DBS, OCBC and UOB, which had record earnings in recent years due to the interest rate hikes. The stellar growth among the banks saw their share price hitting the roof. Another good example is Venture Corporation, which recorded consistently increasing revenues from FY2014 to FY2017. The solid performance of Venture Corporation saw its share price surging from $7.30 to a crazy high of $29.50! The explosive run of Venture share price led to the company joining the elite Straits Times Index (STI) in 2018.
As for the fallen angels of growth stocks, they should be [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
In a bid to raise financial literacy and reward SG Wealth Builder members, I am pleased to launch the Best SGX stock research campaign. Winner of this contest gets to receive cash prize of $1000!
The rationale for launching this activity is to level the playing field for retail investors, who often lack access to quality SGX stock research, especially homegrown SME stocks. Through this SGX stock research campaign, I hope to raise interest in SGX stocks among local investors, and at the same time, encourage members to share ideas and showcase their analytic skills. The winning entry will be published in this blog for learning purposes.
The winning SGX stock research article must cover a stock that is listed in Singapore Exchange (SGX) and should be engaging and interesting to read. From a story-telling perspective, you can share your best or worst SGX stock investments and what valuable lessons that can be gleaned. Ideally, the article should also contain data to back up the thesis and provides insightful analysis.
Winning prize: $1000
- This campaign is open to existing SG Wealth Builder Members only. If you are not a member, please sign up here. Email subscribers are not eligible.
- Each SG Wealth Builder member is entitled to submit one article only.
- Each article must be at least 1000 words in Microsoft Word document. Must not be published at any platform before. Any article found plagiarism would be automatically disqualified. You do not need to provide infographic or images but if you do, they must carry the applicable licenses.
- Email your submission to firstname.lastname@example.org from 1 April 2019 to 31 May 2019. Late submission will not be entertained.
- In your document submission, you must provide your member userid or email address.
- The winning entry will be announced on 7 June 2019 and the winner will be notified through email. He/she must give the consent for the article to be published in this blog in order to receive the cash prize.
- In the event of a lack of quality submissions, there may be no winner. However, under such circumstances, consolation prizes may be given for entries that do not meet the evaluation criteria.
Not a member yet? You may sign up to become a member of SG Wealth Builder. The full benefits and privileges of SG Wealth Builder Membership:
- Access to the latest premium articles of SG Wealth Builder
- Email notifications of latest blog articles
- Participate in SG Wealth Builder campaigns
- Request for coverage on stocks, insurance and other personal financial topics
- Comment in articles and Wealth Forum
SG Wealth Builder Membership
You may sign up for the SG Wealth Builder Membership for only $15 per month. As a member, you can access all the articles, including the premium ones.
Note: After payment is made, you will be prompted with registration form to create your user-id and personal password.