The Straits Times Index closed at 3,244.94 for Wednesday trading. There was not much news in the market after last week's crazy run. Volume on a wet and sleep inducing mid-week did not cross the $2 billion mark.
Being bored, I decided to run a screen from my brokerage platform. My disclaimer would be that I do not know where does the brokerage source their figures from. Also, some of the ratios may have been calculated on a different basis. Nonetheless, the criteria set was,
- 5-year EPS growth more than 10 percent
- 5-year revenue growth more than 15 percent
- Return on total asset more than 10 percent
- Return on equity more than 15 percent
- Price-to-earnings less than 17
The first four were chosen because I wanted to capture good businesses that have a good moat. The PE ratio was set to 17 because it is just slightly higher than the historical PE ratio for the Straits Times Index. It looks like I am searching for growth at a reasonable price. I also sorted out in ascending PE ratios and the top ten are shown in the screen shot above.
I would love to tell you that the top ten stocks will outperform the STI as of today,. Afterall, these companies have good growth and are at cheap prices. But looking at it thoroughly, I would be lying if I were to say I am very confident. With the exception of Ho Bee Investment, all of them are either thinly traded or very small companies. Those who have the guts, may want to look more in depth at what the screen has thrown out. But not before then.