Investing in ComfortDelgro is a mistake?

Just recently, I bought some shares in ComfortDelgro and also shared that in my portfolio updates for July 2017. I have signed up for the Technical Events alerts under my POEMs account. Everyday, they will send a list of stocks that are either “bearish” or “bullish” after going through some form of automated technical analysis called Chartwhiz. Not that I am actually interested in the analysis itself, but because I am still new in the stock market so I get exposed to the different stocks and their names.

It just so happened that ComfortDelgro appeared in the “bearish” section a couple of times. Obviously, it caught my attention and I went to sgx.com to get a glimpse of how bearish it really is.

Turns out its current price of $2.32 is almost at its 52 week low price of $2.23.

Just two years ago in 2015, the highest price of ComfortDelgro climbed to the range of $3.20. That is a decrease of 30% if investors have bought CDG shares during that time.

Comparing the earnings of CDG then and now, it is undeniably more undervalued. With a P/E ratio of 15.5, PTB ratio of 1.92 and dividend yield of 4.42%, I still find it overvalued for the price that I have paid. Despite that, I felt comfortable with paying the current price now because of its strong fundamentals and a wide moat. It is so hard to find value nowadays and a wise old man once said that it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Should the price drops even lower, I have more reason to cheer and buy more.

And yes, of course I know about the hype about Uber and Grab and how they are strong rivals of CDG. As with all bubbles, they pop eventually. That is all that I am commenting at the moment.

I’m also looking forward to the earning release on 11th August! Either way it goes, I am sure that my position right now will be nothing but advantageous.

Thanks for reading!

Miss Niao xoxo

Author: missniao

Hello! I blog about financial matters and things that average people can do to have a better retirement. I want to inspire people to take control of their money and have a better understanding about it. If you are interested to know more, follow me @ missniao.wordpress.com! :)

3 thoughts on “Investing in ComfortDelgro is a mistake?”

  1. Hi Miss Niao,

    This article, which I am pretty sure you read, is quite a comprehensive analysis of CDG. https://www.fool.sg/2017/05/16/1-uncomfortable-trend-in-comfortdelgro-corporation-ltds-latest-quarter/

    With so many taxi players in Singapore, is CDG really a “wide moat”? If your basis for buying is based on public transport services, then maybe you are right (or you may be better off buying SBS Transit). However, I do not think you should brush off Uber and Grab as a bubble. Sometimes sentiments on the ground are very impt and you may have saw how dominant they are now. Yes, the incentives will run dry one day but they are probably here to stay. If a 4th telco can threaten so much of M1’s and Starhub’s share price, Uber and Grab should definitely have stolen a substantial pie of CDG’s taxi business.

    Just my two cents which I hope you have considered. All the best!

    Like

    1. Hi SPR!
      Thank you for your comment. Actually, I did not read that article. In fact, I tend to avoid reading about the news too much when I am analyzing a stock. The reading only comes in after I buy the stock. :/ I’m not sure if too many people will agree with that.
      Perhaps I should also state that I am buying CDG mainly because the price looks right to me at the moment.
      I hope that you would agree with me that it is hard to find someone who lives long enough in Singapore and does not know what ComfortDelgro is, or have never used any of their services before.
      I am not brushing Uber and Grab off as a bubble. However, I do admit that I am speculating that they are within a bubble, which is why I refuse to comment too much. It is merely an observation of mine.
      Maybe a better question to ask myself would be if I could buy Uber’s and Grab’s stocks today over CDG’s, would I? The answer is crystal clear in my mind.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s