Every investor has different kind of approach in choosing what security they will buy in. Each one has different preferences, values, and levels of commitment with regards to investment.
Some are fond of technical analysis where the key factor is timing the market based on the stock price and volume. Some are fan of fundamental analysis where the main consideration is finding the true value of stock, usually in the form of its financial ratios.
While I based my current holdings based on fundamental analysis, I do not find the company’s current financial strengths to be the only factor to consider on. Following are the other reasons why I buy and will continue to buy Wilcon Depot shares:
I. Its Large Profit Margin
Have you seen the prices of Wilcon’s products? If you do, you may find they are a bit pricey compared to most of its competitors. They usually fall to mid-to-high price range which enables them to produce a wide profit margin. This will, in turn, provide two advantages:
a. Having a large profit margin enables the company to make additional funds toward building other projects, and also, increasing the most profound asset, which is cash. The continuous funding for new products is very critical for the company for two reasons:
- To adapt to the customers’ change of needs, desires, and aspirations. People’s experiences, desires, and motivations are constantly changing and those companies who do not adapt with it, go find themselves left out from the market.
- To have a competitive advantage. Having improved, better, and adaptable products & services provide competitive advantage. Nowadays, mediocrity is not an option. Every companies’ priority is to be number one in their industry. And having that competitive advantage can help achieve that goal.
b. The other reason why having a wide profit margin is essential is because it increases the company’s reserved cash, which is the best form of asset. Having large available cash enables the company to be prepared at all times, in case some bad things happen – which is inevitable. Also, it is usually a good indicator that the company is doing well. Thus, providing more attraction for any investors.
II. Continuous Expansion of Branches
One of the long-term goal of Wilcon Depot is to build 100 stores nationwide that will enable them to reach enormous number of customers. Building branches in Visayas and Mindanao has been their priority since the start of their Initial Public Offering. This year, 2019, they are on quest to build 8 stores nationwide and 5 to 6 branches on the succeeding years (53rd was just opened last April 26). Providing a great number of retail outlets to the untouched areas is a certain way to reach more people, thus, increased chance of acquiring sales revenue can be expected.
III. Excellent Management
The management is the one who lead, control, and implement policies to the company. Continuous innovation about Wilcon’s products, system, promotions, and processes, is a result of good and well management. Wilcon’s management go with trends and adapt with the change of technology as they are currently entering the idea of mobile shopping. Also, current promotions such as “Wilcon Win Your Drive Promo” proves that they are doing something to increase their sales and reach brand awareness.
In addition, excellent management makes Wilcon Depot bring the best possible customer experience and make a wide range of different quality products. If you visit one of the Wilcon branches, all of the materials needed in building construction are offered, meaning that their management is in constant effort to provide as many products as possible for their target customers.
That’s it! While it’s important to take note of the company’s financial ratios, it is also essential for all individuals who are planning to invest in the stock market to have a good research on the qualitative aspects of the company. How capable the management is and how innovative the company is are just some of the essential factors in choosing the right company to invest on.