Gus Cosio says so

Ideas on the Philippine Stock Market

Squeezing the juice out

8:00 am  Thursday   4  March  2010     Philippine Stock Exchange Index    3069.29   (+0.24)

We know that there is more juice in this market because there are a lot of players getting involved.  The list of stocks being actively traded is also growing.  The downside remains to be the technical conditions behind the index itself.  It looks like many recognize the PSEi’s resistance to be at the 3100 level.  We’ve seen two attempts that failed to touch the level.

If we look at individual stocks, there are quite a number to choose from for possibly good trades.  Many of them are second liners in the likes of APC, BPC, BEL, ACR, TUNA, I, ISM, PIP,LND, ORE and some more.  Movement is good because it shows us that investors are out there looking for value.

I checked out why BEL was moving on account of a comment by a reader and found out that the story involved APC of which BEL was the biggest shareholder owning 47%.  Apparently, APC was able to sell its geothermal assets to Chevron.  I have not yet seen the details but it looks like a major profit driver.  Of course, both APC has already sky-rocketed and BEL has had a moderate move up, so it should be traded prudently while there is interest in both stocks.  Remember that these stocks go dry after the hype is gone.

I revisited ACR which continues to have the Tampakan story and how it will be folded in from the private holdings of the Alcantaras into ACR itself.  Seeing the activity in the stock leads me to think that activity will increase in ACR.  There could be profits to be made, but treat is as a momentum trade; just stag the stock in and out.

There may also be some juice in BPC;  I noticed erratic movement in the stock and it looks like someone is either accumulating or pushing the price higher.  The only consolation is that BPC is a holding company that owns listed stocks ABS and FPH.  It also owns Bayantel which is a story in itself.

PIP is also a favorite which I think is just biding its time.  LND is an unfolding story although confidence needs to be regained by the people behind it.  They have to get their financial strategy on track then they have to promote themselves to the market.  It could take some time. I noticed that the price to book is quite low although it may need more verification.  ISM has been dead for a while but a few punters look to be reviving the stock which has a decent TMT story.  I also dug a little deeper into ORE and realized that this is a real mine which is being developed by real miners.  My only problem is that I am now stuck with LC because it looks like MVP has placed negotiations with Felipe Yap in the back burner.

Of course, you should not ignore the strong stocks like AP, DMC, MBT, AGI, and EDC.  I think among these EDC might be a good trade since it is close to the bottom of its range.  One should also keep an eye on MBT because it is starting to trade below its book value.  DMC is also a hidden gem that people are now discovering.

The broad market seems to have a good undertone.  Traders are just wary of the index at 3100.  It may make another attempt to go through the level although I will not allow myself to be sucked into something like that.  Judging from yesterday’s results of TEL, earnings growth will not be spectacular so how can we expect spectacular performance from the market as a whole.  This is all about trading smart.  Let’s not forget to temper our greed and fears.

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March 4, 2010 - Posted by | Financial markets in Asia

8 Comments »

  1. Thanks for the update on BEL, sir gus.
    I’m also thankful that I held on to PIP and it seems that it is starting to fight once more.

    Comment by Finch | March 4, 2010 | Reply

    • Finch,
      I learned that Coke needs to raise prices because its cash flow needs a boost. That will be very good for PIP whose Philippine balance sheet is very healthy already because they can follow Coke’s price increase. Such an increase will surely flow significantly to bottom line.

      Comment by Gus Cosio | March 4, 2010 | Reply

  2. Yes, I’m just waiting for DMC to ripen!

    What would you say is a good price to sell EEI at? Seems to keep going up, but at the same time I don’t want to be greedy.

    Comment by Nicole | March 4, 2010 | Reply

    • Nicole,
      EEI is a pure contracting (construction) firm while DMC has a portfolio of businesses ranging from water utility, housing, energy (power & coal) and contracting/Construction. You can own both or play switching between the two. I think EEI can go 20% further in the next few days. DMC is consolidating its gains for the time being. My take on a trade that makes sense is to see if you can sell EEI above 3.00 and buy DMC close to 10.

      Comment by Gus Cosio | March 4, 2010 | Reply

  3. Sir,

    what are your thoughts on JGS?I notices it have a good business portfolio but the volume of trades are quite low,

    thanks

    Comment by alex agujetas | March 4, 2010 | Reply

    • Alex,
      There was another reader who asked about JGS. I guess with URC up 190% since march ’09 and RLC up 240% in one year, there must be a case to be said for JGS. Although, JGS is also up 170% since March ’09. I think a manageable strategy on the stock is to wait for some downward adjustment. The reason that JGS lags URC and RLC is because it is dragged by DGTL and other unlisted companies in its portfolio. In my view, it will be more profitable for you to trade URC and RLC than JGS. Timing is of course important. JGS will not be as actively traded as URC and RLC.

      Comment by Gus Cosio | March 4, 2010 | Reply

  4. sir gus, what about GLO, JFC and BPI are they good buys right now?

    Comment by JimBoy | March 4, 2010 | Reply

    • Jim,
      These 3 stocks are fundamentally good stocks. Of the 3, I think BPI is the best buy today. I think GLO will be a laggard. JFC is the kind of stock that you buy when the market drops. In general, these are very steady stocks. You just find a good timing to buy them and then sleep soundly.

      Comment by Gus Cosio | March 4, 2010 | Reply


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