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Stock Recommendations for Long Term Investment

A stock must have at least the two conditions to be able to be collected in in the long term, ie more than one year, namely: good performance, and reasonable stocks’ movement. The definition of good performance is: generating profits that is constantly increase over time. And what is meant by the reasonable stock movement: the pattern continues to rise over time, according to its fundamental, and free from speculation. This article is important for the long term investor.

The most pleasant thing by becoming a long-term investor is, you don’t have to be in front of the computer all the time to observe the stock price movement. And if your choice is right, then after a year, you will earn greater interest than the deposit rate, which is about 20 - 30%. Interesting, isn’t it?

The next question is, what stocks are good to be collected, for a year or so? Because if you choose the wrong one, you will only get loss, amounted to 20 - 30% or even more.

There are several blue chip and non-blue chip stocks that are suitable for the long-term. Some of them have been discussed in my previous article. In this article, I will discuss the three of them.

Mayora Indah (MYOR)

I have already discuss about MYOR on last May 14. Here’s the link. At that time, MYOR was in position of 5,800. Fundamentally, that price was considered low. I mentioned that MYOR probably will go down briefly to position below 5,500 before then going up, up, and up again. And apparently, that’s true. On May 21st, MYOR fell down to position of 5,250, and then keep going up after that. In the future, it seems that MYOR will continue to go up.

Why MYOR is suitable for long term? Because in general, its performance is good, and the sector is prospective. I mean, to any time, candies, wafers, and chocolate will always be salable. In addition, the MYOR’s stock movement is considered reasonable where any increase that occurs in excess will be offset by a great decline as well, so the share price of MYOR almost always are at the fair position.

Gudang Garam (GGRM)

You do not have to be a smoker to know that Indonesia is one of the countries with largest number of smokers in the world, and constantly increasing over time. As a result, GGRM almost always increase its net profit between 15 -2 5% from year to year. In First Quarter 2010, GGRM recorded an increase of 18.9% of net profit. Its equity was also rose by 18.0%.

GGRM’s stock movement is hardly touched by speculation. it is because this cigarette company rarely talk much to the public, and because the cigarette’s price they sell is never decline, aka continues to raise. This condition is very different from the price of coal, petroleum, etc, which can go up and down all the time. This afternoon, GGRM was closed up at 1.12% to position of 31,700. It resulted in 16.4 times of PER. It was actually a bit pricey, but still worthy to be collected. If you are interested, then the price should fit between 30.000 and 31.000. It looks like GGRM will be down for a moment in the next few days or weeks.

Bank BTN (BBTN)

Well you know, you might be surprised by my latest preference. If you want to invest in the bank sector, why don’t invest on BMRI, BBCA, BBRI, or the other top banks? The answer is because those mentioned banks are not suitable for long-term collection, because its stock movement fluctuation is very high. Those banks are more suitable for short-term; you go in when the price is low, and sell it when the price is high. Ok, but isn’t BBTN is the same?

BBTN is new member in the market, which was newly registered since the beginning of the year 2010, with initial price of 800. Throughout March, BBTN quickly pushed up to the position of 1,650, before being corrected (of course). But the increase is not due to speculation (visible from its normal transaction volume), but because greed that occurs at that time. Usually if there is new stock with good performance, the demand will be directly booming, so the price goes up dramatically. In First Quarter 2010, BBTN scored an increase of net profit of 71.7%.

Up until today, BBTN stock movement is still up and down. But in the future, along with its promising performance, BBTN has the opportunity to strengthen steadily and follow its increase of fair price. The good performance on First Quarter 2010 is likely to continue in the second quarter. Why so? Because BBTN has pretty good capital adequacy ratio (CAR), which is 21.2%, and because BBTN is the major player in housing credit sector. You can collect BBTN on its price below 1,200 - 1,300.

Actually there are still many others. But I guess it’s enough for now.


Original article was written on June 9th, 2010

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