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Three Shares for Easter

EasterEggsAnother bank holiday is just around the corner – this time it’s Good Friday, which means another long weekend for us Singaporeans to look forward to.

It could also mean a welcome boost for Singapore companies looking to us locals for some extra holiday-spending after, what has been, a lacklustre January for retail sales. It was only two weeks ago when The Straits Times reported that retail sales in January were “declining 2 per cent from a year earlier”.

Holidays have traditionally been greeted with relish by retailers and also by entertainment-related companies. In the USA, holiday-shopping is closely watched with companies reporting and analysts digesting all kinds of shopping-related statistics.

It might be logical to think that companies like Breadtalk Group  (SGX: 5DA), which operates restaurants like Din Tai Fung, could benefit from people choosing to have a relaxing meal out while taking a break from work. The long weekend could also provide a good opportunity for resort and hotel operators like Genting Singapore (SGX: G13) and Banyan Tree Holdings (SGX: B58) to entertain more visitors looking for a short getaway.

It is always welcome to know that a business has products or services that may be in greater demand during the holidays. But wouldn’t it be better if they are in demand all year round?

Even though Breadtalk might conceivably see an increase in diners during the holidays, we know that demand for their fare exist all year round. Sales last year was evenly spread over the four quarters, which suggests no overwhelming seasonality.

Likewise, occupancy rates for Banyan Tree’s hotels and resorts averaged 54% last year, with the highest and lowest being 57% and 49% in the second and third quarter respectively. The 8 percentage point difference suggests that demand is not especially cyclical. That is what is more important in the bigger investing picture – demand that is sustained all year round.

Of course it is fun to try and guess which companies stand to benefit from some short-term increase in spending. It may also be fun to catch a temporary jump in the share price if they should report better-than-expected sales.

However, it is more important for long-term investors to identify companies with sound business models. A company whose products are always in demand is generally better than those that rely on a short-term fillip.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Contributor Chong Ser Jing doesn’t own shares in any companies mentioned.