May - To buy or not to buy?

It is a little hard to focus now... While the price of most of the counters now is what seems like a 'good buy' but no one knows exactly the direction of the market as yet. The domino effect of the greece debts into the european markets, US markets, asian markets has caused Singapore market to drop by quite a far bit since the beginning of May. Now, with the world cup coming, what's next? History has shown that the market is always extremely quiet during the world cup season, will it still be the same this time?

I do not have the answer to my question... but for those who are interested to buy on this dip. you may be interested in the following article. In times like this, to play safe, look at defensive counters. Avoid penny counters!


STI 15 mins chart

Investopedia explains Defensive Stock
Defensive stocks remain stable during the various phases of the business cycle. During recessions they tend to perform better than the market; however, during an expansion phase it performs below the market. Betas of defensive stocks are less than one.

The utility industry is an example of defensive stocks because during all phases of the business cycle, people need gas and electricity. Many active investors will invest in defensive stocks if a market downturn is expected. However, if the market is expected to prosper, active investors will often choose stocks with higher betas in an attempt to maximize return.

A report from DMG and partners research strategy to provide you with some insights on defensive counters.
Market is down, where should we be looking? We advise investors to stay defensive with a focus on stocks with good earnings visibility and reasonable valuations. We highlight three major screens:
1) growth stocks;
2) stocks with attractive dividend yields and low earnings risks; and
3) cash-rich companies.

Screen 1: Growth stocks. Stocks are ranked by their projected PE-growth. Notable names with PE-growth below 1x include CapitaLand, SIA, WingTai, Venture and Noble. Of smaller caps, notable stocks include Healthway Medical, FJ Benjamin, Broadway and CSC. However, earnings of some of these counters may be adversely affected in a cyclical downturn.

Screen 2: Cash proxy stocks; low earnings risks and attractive yields. Of bigger caps, with cash-generative operations, yields in excess of 6% and minimal overseas exposure, we identify Starhub (9.3%), Suntec (7.5%), A-REIT (7.5%), M1 (7.3%) and SPH (6.2%) as ideal cash proxy stocks. We readily identify S-REITs as strong cash proxies which pay out 100% of earnings as dividends. For defensiveness, our pick remain ParkwayLife REIT (7% yield).

Screen 3: Cash rich companies could be in focus. Companies with large cash holdings include ARA and Venture.

DMG top nine best picks
A-REIT 1.83 TP:2.11 Attractive yield of 7.2%, above heyday yields of 6%. A Trading BUY at current levels.
Broadway 1.08 TP:1.46 Riding on the global HDD and semiconductor growth themes.
ComfortDelGro 1.45 TP:1.78 Trading at 13x FY10 P/E, its lower-range 13-17x P/E trading band; offers yield of 5%.
CWT 0.88 TP:1.10 Potential M&A in the works; attractive special dividend yield of 17%in FY10.
Ezra 1.93 TP:2.80 Positives from potential acquisitions and strong earnings growth
FNN 4.59 TP:5.30 Strong unbilled property sales of S$2.3b and Indochina's resilient F&B growth.
M1 2.05 TP:2.55 Attractive yield of 7% limits downside risks; set to benefit from NBGNBN in mid-2010.
ParkwayLife REIT 1.29 TP:1.52 Defensive business structure; accretive acquisitions on the cards; offers yield of 6.7%.
SPH 3.81 TP:3.95 Trading at 13x FY10 P/E, its mid-range 10-15x P/E trading band. A Trading BUY.