Which stocks to invest in 2019?

08-Jan-2019 Intellasia | Dien dan Doanh nghiep | 6:00 AM Print This Post

Stocks with good fundamentals, consumer stocks, stocks with opportunities from Free Trade Agreements (FTAs), shares of State-owned enterprises, etc. are recommended by VietDragon Securities Company (VDSC) in 2019.

According to VDSC, in 2019, investors should choose stocks in four main groups. The first is the group of stocks with good fundamentals, which are stocks with high liquidity ratios, low leverage ratios, and not subject to exchange rate risks. These stocks have a stable dividend policy and high dividend yield. Businesses that meet the above criteria must be those with higher dividend rates than 12-month or longer tenor deposit rates. “DQC, PPC and MSH are three stocks that meet the criteria”, VDSC said.

As for DQC shares of Dien Quang Lamp Joint Stock Company, according to VDSC, the production and business activities of this company are still in difficulties in the next 1-2 years due to fierce competition from goods imported from China. However, the new factory will come into operation from 2019 and enjoy tax incentives, which will help improve the after-tax profit of this business. DQC shares are currently trading at approximately book value, and give an 11 percent dividend yield.

The second is consumer stocks. According to VDSC, the government has many policies to encourage private economic development supporting long-term growth for many sectors, especially consumer sectors. However, due to strong growth in recent years, the profitability of consumer businesses may decline gradually in 2019. Accordingly, the stocks of companies in the retail, consumption for necessities sectors, beverage and food, such as PNJ, MWG, MSN, SAB, QNS, etc. may attract cash flows.

The third is the group of stocks with opportunities from FTAs. In 2019, many FTAs will be signed or become effective, such as VietnamKorea FTA, Comprehensive Partnership Agreement and Transpacific Progress (CPTPP), VietnamEU Free Trade Agreement (EVFTA). Accordingly, Vietnamese companies will have opportunities to access Asian, European, and other developed markets due to lower import tax rates among participating countries with commitment for reduction following a roadmap.

“Investors may be interested in stocks of Industrial Zones (KBC, VGC); Logistics (GMD); Textile (MSH, STK); Automotive retail (HAX); Seafood (VHC)”, VDSC recommended.

The fourth is shares from equitisation of State-owned enterprises and divestment of the State in 2019.

However, VDSC believes that the trade war as well as the forecasted slowing global economic growth in 2019 will negatively impact the groups of industries in which Vietnam does not have a competitive advantage, such as steel and tires.


Category: Stocks, Vietnam

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