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How do you read price fluctuation?


Koon Yew Yin 15 Sept 2020

Covid 19 pandemic is affecting everybody’s movement, every business activity, listed and non-listed companies with the exception of medical gloves and medical products for the virus prevention. As a result, the demand for gloves far exceeds supply and all glove makers are increasing their selling prices to make more profit. That is why each of the glove stock has shot up a few hundred percent in the last few months. Supermax has the best ability to increase its selling price as shown in its latest quarterly announcement.

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As the share price is going up or coming down not all investors react in the same way. Some want to sell and some want to buy some more. When there are more buyers than sellers the price goes up and when there are more sellers than buyers the price goes down. As a result, the price fluctuates frequently which is confusing all investors. 

A few days ago, all the glove stocks were plunging so rapidly that many weak hearted investors including expert chartists were so down hearted as if suddenly there is no more demand for gloves. 

Investment does not depend only on financial analysis and technical analysis. To be a successful investor, he must be able to control his emotion of fear and greed. In fact, just now one of my young friends rang to tell me that he sold Supermax yesterday when it shot up Rm 1.50 and now, he wants to know if he should buy back now. I cannot say for sure to buy or not to buy because the price fluctuates do frequently. 

However, Supermax has the best profit growth prospect as reported in its last quarter ending June, EPS 30.58 sen, Q on Q 462% and Y on Y 2,552%. 

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Comfort reported in its last quarter ending July, EPS 7.34 sen, Q on Q 162% and Y on Y 501%. 

Top Glove reported in its quarter ending May, EPS 13.59 sen, Q on Q 200% and Y on Y 366%. Top Glove will report its profit for the quarter ending Aug on the 17 Sept. 

Currently the number of Covid 19 cases in the world is still spiking higher and higher and many scientists predicted the pandemic will not be under control for at least another 1 or more years. 

Investors should not be afraid of the price frequent fluctuations and buy glove stocks for the long term to make more money. 

Based on my research, I consider Supermax is the best stock to buy.  

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