Gus Cosio says so

Ideas on the Philippine Stock Market

How do we turn the switch on?

7:00am  Friday   12 March 2010    Philippine Stock Exchange Index   3125.66  (+0.19%)

I was not able to follow the market closely today as I had to go in for a check up.  This old body is complaining for attention as my blood pressure for the first time shot up to an alarming level.  The hospital did not have a wi-fi network that I could log-on to, so I had to content myself with watching the ticker on the ANC channel.  How I wish that they had better and more insightful commentator in their market coverage.  It would be helpful and educational to a lot of viewers.

Anyway, what caught my eye was DMC that had traded to a high of 13.25 Thursday and eventually closing at 12.75, which goes to show that you cannot put a good stock down.  I remember a couple of weeks back when a reader, Nicole, asked me if she should not be greedy and take profits with EEI which hit 3.00.  I advised her to sell EEI around 3.00 and buy DMC around 10.75.  I hope she was able to do it.  I own some DMC which I bought at 9.40 after selling EEI at 2.60 some weeks back.  These are trades that I like to do, switching among similar stocks.

I am thinking that a similar switch might work between any of FPH, FGEN and EDC into BPC.   Or you could switch ABS and MER into BPC.  If you do not own any, it looks like BPC is catching up with the move of its daughter companies; and you could just buy it outright.  I actually got the idea when a reader asked about the move of URC and RLC and JGS was lagging behind.  I should have bought JGS as well, but I’m not complaining about my BPC position.

I was surprised that the index reversed near closing time.  It only tells me that there is still accumulation going on in spite of the index hovering the top of the trading range.  We continue to be influenced by what is happening in Wall Street.  Thursday’s U.S. jobs numbers saw a decline in unemployment claims but analysts do not place great enthusiasm on the total employment picture.  I believe that the same sentiment on the strength of the U.S. recovery will keep a lid on most equity markets until the end of Q12010.

Overnight, the S&P 500 traded to its best levels in 17 lead by Citigroup which was up 5 %.  This is a very good sign of recovery for the financial sector which would have positive impact on our market.  Remember, Citigroup was a very influential part of the local financial market in the past.  Anyway,  I hope to pore through more information this weekend and come up with new ideas and insights.  In the meantime, today, I hope that the market does not become as lethargic as I was.   From the looks of it at yesterday’s close, there is some kick left.  I’m just not sure how strong.

Advertisements

March 11, 2010 - Posted by | Financial markets in Asia

21 Comments »

  1. Hi Tito Gus,

    Sorry to hear about your blood pressure spikes! I hope you’re not feeling too drowsy anymore.

    I did actually get EEI and DMC a few months ago, so I stand to make quite a profit if I am able to sell today (I wasn’t able to yesterday because I was out last night — that’s when the trading hours happen in Manila).

    I am quite pleased that the energy sector is doing so well these days. I hope this means that new green technologies are making their way into our country.

    Comment by Nicole | March 12, 2010 | Reply

    • Hi Nicole,
      I’ll just be taking it easy today on prodding by my wife. Except for a lingering cold, I feel a lot better. Yup, green energy is developing here. My friend was telling me that he was at the commissioning and inauguration of the Toledo Power in Cebu province. It uses clean coal technology. It has a smoke stack but the smoke is invisible even when it runs full steam. The technology was developed by the Taiwanese and I hope most coal fired plants shift to this technology to help clean our environment.

      Comment by Gus Cosio | March 12, 2010 | Reply

      • Good to hear you are feeling better!

        Also good to hear about that clean coal technology. Really interesting to see what people have been coming up with in the clean tech sector.

        Comment by Nicole | March 13, 2010

  2. Good health to you, Sir Gus.

    I just want to ask. Why one would invest in PERA instead of investing in Mutual Funds or Trust Funds?

    Thanks

    Comment by Oliver Mia | March 12, 2010 | Reply

    • Oliver,
      It is not mutually exclusive. PERA allows you to invest Php100,000 a year and I think there is a tax break on the amount deducted from your taxable income. Now, you can use that Php100,000 to invest in mutual funds or stock or bonds as you wish.

      Comment by Gus Cosio | March 12, 2010 | Reply

      • I see. So the main difference is the tax break?

        Thanks Sir..

        Comment by Oliver Mia | March 12, 2010

  3. Hi Gus, hope youre well now… i notice that RFM and SGI are trading at a very good valuation.. These two companies have reported decent profits in Q3 and I expect the same in Q3.. Whats your take on this Gus?

    Btw, LC and Cybr has started to move up today.. hope it can sustain the momentum… 🙂

    Comment by mike | March 12, 2010 | Reply

  4. Mike,
    The problem with RFM & SGI are they have left a bad impression on investors already. I noticed that there has to be something significantly new for people to start looking again. Valuations may be positive but if there are no brokers or analysts to promote the share to a few institutional investors people will not be attracted i.e. no demand will be created for the stock. I used to own these 2 stocks ages ago, but nothing exciting has come up. I’d rather use my limited cash to something that has a good chance to move.

    Comment by Gus Cosio | March 12, 2010 | Reply

    • Hi Gus,

      RFM just had a nice 7% jump today, with the momentum building on this stock, i think its going to break out at .6/days in the next few days to find new highs…

      Another issues that i think are worth watching in the next few days are VLL, COAT and GLO.. with nice build up in volume, these 3 is poised for a break out…

      let me know your thoughts on my assessment Gus…

      Comment by mike | March 15, 2010 | Reply

      • Mike,
        On RFM, I wouldn’t get sucked into that stock unless a very compelling story was verified and substantiated. I’m sorry but that stock never made money for anyone and I have no reason to think otherwise. I’d rather miss it altogether than get stuck on RFM.
        COAT and VLL are good trades. Of the two, I prefer COAT. I do not think GLO will move much higher. I’ll put my money on something like BPC or PNB or DMC.

        Comment by Gus Cosio | March 15, 2010

  5. Hi Kuya Gus. I discovered your blog just recently. So far, I’m enjoying and at the same time learning from your prudent analyses. BTW, I just wanted to hear your opinion on the power sector play. Among the power generation stocks such as FGEN, AP, EDC, TA, etc., which do prefer to invest into with a time frame of 3 months? I’m quite hesitant with AP since it has gone up alot already while FGEN has a difficulty in going up probably because of the over-supply of shares brought about by the SRO.

    Comment by Ken | March 12, 2010 | Reply

    • Hi Ken,
      I’ll have to disagree with you on AP. It is probably the surest ball of all power sector plays. I made a mistake of selling too soon. I’m waiting for a pull-back to try to get back in. The power sector will be the most robust in the market this year and even next. Right now, I am only familiar with the activites of AP, FGEN, EDC and SCC – SCC now owns Calaca. the holding companies that should benefit in some way from the power plays are AEV, FGEN, DMC and BPC. Another yet to be analyzed is the SMC power industry group under Ramon Ang. This means PCOR which is putting up a plant in Limay and from what I understand, CYBR. I’ll have to ask you to go deeper though on the SMC related plays because they are still in the making.

      Comment by Gus Cosio | March 12, 2010 | Reply

  6. Hi Sir Gus, Hope you’re okay now. Thank you sir for your recomendations on what stocks to buy. I followed your advise on EDC i bought when it went down to 4.60 the i sold it at 4.90 because i want to buy BPC. I posted at 3.05 but due to heavy accumulation of one broker I was not able to buy but I’m still hoping i could still get at the lower price. I also bought MEG at 1.26 coz I noticed that on the technical side its a buy on 1.26. I don’t know if I am right on how I look at the chart. I’m so thankful that one of your friends shared your website to me. It really helps though I am not so skilled in analyzing stocks but reading all the blogs, i got an idea on how to study a stock. More power sir..

    Comment by ella | March 12, 2010 | Reply

    • You’re probably correct on MEG, Ella.
      Don’t be too impatient on it because it could go down to 1.20 which I think is the stronger support level. MEG is a good stock so don’t get nervous when it goes down. Should it go down further to 1.10 or so, you should be prepared to buy some more rather than be panicky like most people when prices go down. Remember, we are only starting the second year of the recovery. We have 2 or 3 more years of uptrend before we consider that the cycle is over.

      Comment by Gus Cosio | March 13, 2010 | Reply

  7. Hi there!

    Just dropped by to wish you well. Take it easy!!!

    Comment by mark | March 12, 2010 | Reply

    • Thanks, Mark.
      I appreciate the gesture.

      Comment by Gus Cosio | March 13, 2010 | Reply

  8. Hi Sir Gus, I remember one of your blog posts last year called “Porkchops and Hamburgers”. Better cut back on those high cholesterol and salty foods. I hope you get well soon and don’t forget to take those anti-hypertensive medicines.

    Comment by melvin | March 13, 2010 | Reply

    • You bet Melvin,
      One has to take care of one’s body especially when it is on the far end of its depreciation schedule.

      Comment by Gus Cosio | March 13, 2010 | Reply

  9. Hi Sir,

    Ive reas company valuations using price to earnings ratio, price to book value, discounted cash flow method, sum of the parts etc. Which one is generally applied to which industry? Or it is only the opinion of the specific analyst?

    Also there are comparisons made between regional peers, in the valuation, say in HK or Singapore. But the economy, the consumers, the government, GDP etc etc are drastically different between Phils for instance and Singapore.

    Thank you for your thoughts on this.

    Regards,

    Comment by alexis | March 13, 2010 | Reply

    • Alexis,
      People use all these valuation methods. Personally, I look at all of them but I am also interested at the historical P/E, P/B and how it compares to existing readings. Again, I must point out that these are all guides. You can’t treat it like auto-pilot. You have to navigate depending on your time frame and if your are interested in timing your trades.

      Comment by Gus Cosio | March 14, 2010 | Reply

  10. Hi Sir Gus, Hope you’re doing fine now sir. Sorry if I keep on disturbing you about the stocks. Btw sir thanks for the positive opinion regarding MEG. I’ll wait if it will go down to below 1.20 maybe that’s the time that I’ll add more. I’m waiting for PNB to go down to 22.00 or below sir but I’ve noticed its trading between 22.50 to 23.00. Hope so it will. Well anyway sir as what you’ve said “be patient”. Thanks and more power….

    Comment by ella | March 15, 2010 | Reply


Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: