1) Company Income
- Value of a company is judged by its current value and future cash flow. Future cash flow is the share dividend, profit, and cash flow quantity.
- Normally, many shareholders will hold this kind of share because it will give the satisfactory dividend to the shareholders despite of the on-going stock market situation.
- In most of the time, the value of share in such company shows a stable trend in stock market. The effect of current stock market trend is insignificant to this kind of share/company.
- Applicable to companies in which the consumer will use the company's product continuously.
- Examples: Instant noodles, milk powder, canned food, soft drink
- The company will give significant dividend to the shareholders which is the profit from their sale of product.
- It is quite advisable to buy this kind of share at anytime because the risk is lower and the price is stable all the time even thought the economic crisis occurs.
- In judging this stock, we more focus on the future aspect and vision of company, rather than the effect of current stock market situation.
- In easy words, even the economic is not good, we need to eat, drink, and deal with our daily necessity. Hence, these kind of company will not just wind up just because of economic crisis. Therefore, they can provide good dividend to shareholders if their product is good and sale is stable.
2) Market Current Situation
- Applicable to companies which the profit depend on the current economic situation of country.
- Examples: TM, TENAGA, MAYBANK
- In these kind of shares, although dividend is given, but the share price is mainly depend on the current economic situation.
- Many term need to be known and calculate to estimate the current value of the shares.
- The time of buying the share is important, to make maximum profit, we need to buy the share at the time when it is at lowest price.
3) Property of Company
- This is the least significant criteria among the 3 elements.
- Example of property: land property, building, and other fixed assest.
- A company will not easily sell their property to get the cash in market normally
- When we buy a share of a company, what we will concern the most is the future cash flow quantity of company, instead of the income of company from selling the property.