How You Can Make Use of Your Everyday Experiences to Help You Invest

There’s one important thing about the stock market that I really believe in and that is, how great investing opportunities can actually be around us all the time. Every now and then, I see this belief of mine get reinforced and yesterday evening was one such occasion.

I was having dinner with a close friend of mine, along with two other newly-acquainted friends, at Umisushi, a nondescript chain of Japanese-food retail outlets owned by Neo Group (SGX: 5UJ). The company’s relatively new to the public stock market as it only got listed on the Catalist stock exchange on July 2012 at a price of S$0.30 each. Since then, shares of the company have jumped three-fold to S$0.90, roundly outpacing the Straits Times Index’s (SGX: ^STI) gain of a paltry 3% to 3,089 points.

As we were having our meals, this close friend of mine asked if I had noticed the prices of the sashimi and other food items in the store’s shelves. I hadn’t and asked him what the significance was. According to him, he had personally observed how those packaged food items had prices that are actually comparable to other full-service Japanese food & beverage chains. I haven’t been able to verify the numbers, but if that’s true, then that’s certainly a big advantage for Umisushi.

A typical Umisuhsi outlet operates on a self-service model and is staffed by only three to five employees who help tidy the area, operate the cash register, and prepare the food. At the same time, each outlet occupies a very small area as compared to the typical Japanese food establishment which can mean lower rental costs.

If Umisushi is able to charge prices that are comparable with full-service restaurants for certain food items and is able to operate at a lower cost due to a lower staff count and retail floor area, then that could mean some healthy margins there.

My friend went on to share how he had been dining regularly at Umisushi over the past few years and that he had observed in 2013, how the number of retail stores had been growing all over Singapore. This was well corroborated with how the retail chain went from one outlet in Singapore in 2007 to 19 as of August 2013. The growing number of Umisushi outlets prompted him to dig further into the company behind the business and that’s when he found Neo Group.

He also realised that the company had a thriving catering business, with one of its catering brands, Neo Garden Catering, named as Singapore’s Number One Caterer in 2010 and 2011 in an AC Nielsen survey. Even though he realised that Umisushi is a smaller part of Neo Group’s sales (accounting for a quarter of revenue in the six months ended 31 July 2013), he personally saw strengths in the company’s catering business that pertained to superior logistics and economies of scale.

He eventually invested in Neo Group’s shares in the second half of 2013, and has since reaped a nice profit considering how the company’s shares were worth anything from S$0.37 to S$0.60 each over that period.

So, the point here is not me trying to show how good or bad Neo Group is as an investment. But rather, it’s to highlight how even simple everyday-dining experiences my friend had could lead him to a profitable goose-chase for an investing opportunity. If we keep our eyes peeled to the products and services we consume daily, great investing opportunities might just be around us, all the time.

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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 writer Chong Ser Jing doesn’t own shares in any companies mentioned.