9;00am Monday 5 March 2012
On some days, it is just very difficult to get started on writing out my thought on the Philippine stock market. It even gets more difficult when stocks have rallied so much on a broad front. We are seeing index stocks up around an average of 15 percent since the beginning of the year. Much of the second and third line stocks have also moved significantly, particularly those in mining. Recently, oil stocks have started to move and prospects are just about as bright as mining and while the risk reward ratios are huge, getting in early in the game could minimize risk exposure. It is times like that I appreciate comments and questions coming from readers. These comments help give me ideas. In fact, that is what is wonderful about the market – it is the confluence of a multitude of ideas. The brightest ideas are not always those that make money. Sometimes, it is the inane that dominates.
Anyway, follower Raphael asked for ”my opinion on the current price movement of MA/B? At current prices, does MA/B present a good opportunity for short term or long term trade gains?” My response is I think MA/B has a lot of promise. It has its Kalaya-an property which is now part of the Philex Boyongan Project. Studies show high-grade copper-gold porphyry deposits estimated to be greater than 100 million tonnes of about 1.0 % Cu and 1.2 gmt gold. My thoughts for mining stocks is that if the resource is proven, then the value will emerge in the stock price in due time. That makes me very positive on MA/B. All you need is patience.
Benson shared this information on MEG: ”EPS estimated at P0.24/share (estimated annual EPS based on 3Qtr earnings), translate to 7.58x P:E. I am surprised that market value at present is only 89% of BV of P2.25/share. Although profit drops 20% in 3rd quarter 2011, it’s EPS is rising (2009 = P0.15 ; 2010 = P0.19 ; 2011 = P0.24 estimate base on average 3 quarters). How do you see the market price of MEG going forward?” My take on MEG is that the stock suffers from an overhang of supply coming from the large amount of warrants issued over a year ago. It is really a matter of supply and demand. When the market feels that there is too many shares that are being traded, unless there is a dramatic surge in the stock’s EPS, it will usually trade on its cheap side. I would rather trade AGI which has less of an overhang and a more exciting prospect due to the Resorts World project.
Buko Pie asked about BHI and its long term prospects. I can only say that this stock is a small capitalization stock andhas very little supply in the hands of the public. As such, any large buying can really push the stock’s price higher even if there is no research information. As to its long term prospects, I believe that more transparent opportunities can be found in other stocks for the time being.
With the index above the 5,000 level, I think many would be in a quandary of what to do. If I had to buy stocks today, I would still stick to the index stocks because they will continue to attract the bigger portfolios in spite of their already hefty rise. I would continue to go for TEL, MBT and JGS because among the blue chips, I think these are the cheapest. They are probably also the stocks that would be safest from any correction.