Investment ideas close to home
Published in the Daily Telegraph, December 2014 by Dale Gillham
Selecting stocks for your portfolio may look complex. But I believe that the simplest things in life are often the best. This applies to share market strategies.
Simple, in part, means looking for ideas close to home.
What shares to buy could be as easy as picking up items in your house: the companies that make the brands you have in your home can be good shares to own.
That said, a good brand is one thing, but doesn't automatically mean that the company will rise in price.
Many household brands belong to companies that are listed on the Australian Securities Exchange.
Big names include Aussie icons such as Bunnings (owned by Wesfarmers), Myer, Woolworths, Coles, Village Roadshow, any of the big banks, Coca-Cola, and the list goes on.
Inexperienced investors are often more comfortable buying into a share they know something about.
Coca-Cola Amatil is a wellknown brand. This can help if you want to get your children involved in investing.
When children recognise brand names they make an emotional connection with you when you discuss them, and this helps get them involved.
CCL owns the rights to produce many products by parent company The Coca-Cola Company in the US.
So, when is the right time to buy?
Focus on company fundamentals, like whether the company is profitable with good cash flow, earnings potential, and low debt.
In the case of CCL, the company currently has high debt and flat to negative earnings, which explains why the share price has fallen heavily this year. Here is a hint, falling share prices lead to future opportunities.
While CCL has the potential to become a turnaround story, the current chart shows that the market is not yet convinced, and if the big money is not flowing into it, then I am not risking mine and neither should you.
What you could do is what I will do, and that is to keep watching until the share price starts to rise.
To learn how you can gain the required knowledge and skill to ensure your success in the share market click here.
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