Does this mid-cap deserve attention?
Shares in Bumitama Agri (SGX:P8Z) is currently trading at S$0.63, but a key question for investors is whether it is well positioned to move higher from here.
Part of the answer could come down to whether it is well positioned to weather economic shocks and any market volatility. To understand this, it’s worth looking at their profile to see where their strengths lie.
The promising news is that Bumitama Agri shows signs of positive ratings against some important financial and technical metrics. It is particularly exposed to of them Influencing factors of return on investment: high quality and strong momentum.
Here’s why it’s important…
Why Quality Stocks Pay
When it comes to stock analysis, company quality tends to translate into high profitability and strong margins, some of the best in the industry. These types of businesses are stable, growing, and often have accelerating sales and profits. They also have solid and improving financial histories, with no signs of bookkeeping or bankruptcy risk.
One of Bumitama Agri’s most remarkable quality indicators is its return on capital employed over 5 years, which is 13.5%. Good double-digit ROCE indicates companies that can grow very profitably.
Harness the power of momentum
Positive dynamic trends are evident in stock prices and earnings growth. You can find the clues in stocks that are trading near their 52-week highs and outperforming the market. They will often exceed broker estimates and get forecast updates and recommendation changes.
Such is the case of Bumitama Agri, where the share price has returned 77.1% relative to the market over the past 12 months. Market volatility and economic uncertainty can significantly dampen momentum, but previously strong stocks can quickly rally when confidence returns.
In summary, good quality and momentum indicate some of the best stocks on the strongest uptrends. This combination of factors can be a clue to finding stocks that can generate solid investment profits over many years.
In good times, these stocks can become expensive to buy. But in volatile markets, there may be chances to buy them at cheaper prices.
What does this mean for potential investors?
Finding good quality stocks with strong momentum behind them is a strategy used by some of the world’s most successful investors. But beware: these factors do not guarantee future returns and we have identified some areas of concern with Bumitama Agri which you can discover here.