7:00pm Thursday 14 July 2011
Today, we saw the Philippine stock market trade up very strongly in the first half hour. A few index heavyweights were leading the market such as MBT, DMC, BDO, ICT and even MER. My take on such a move is that investors are positioning for earnings report of these companies because there are early indications that good results should be coming in. I am particularly keen on some of the holding companies which are looking quite rosy. Of course, DMC continues to be a favorite, and I am quite pleased that it looks like it is breaking out. SM which always seems to be a laggard is so cheap that I am hopeful that after its earnings report comes out, it too, can break out. Of course, AC has been underpinned by its own buy back program; and while I see good support for AC, I doubt if we can see any spectacular move on this stock. I think I’d rather bet on ALI which has a higher beta.
Not to be outdone, I think, would be the results for JGS. Perhaps, the DGTL merger profits would not yet be reflected in this quarter’s earnings, but the excellent performance that I expect from URC and RLC should carry things out for JGS. It has been pretty well supported at these levels, and I think that it is a good candidate for a breakout on positive earnings results.
Having mentioned DGTL and JGS, I cannot ignore TEL which is still a stock to reckon with. At present, I believe all major institutional portfolios are keeping even weight on TEL. The recent NTC decision on their tiff with Globe should strengthen the merger with DGTL. The reason I am excited about the consolidation of these two is the better service I will be able to get when Sun and Smart become seamless. Because I use all three carriers, I can only expect the service I get to be better when the merger goes through because it would mean lesser dropped calls between Sun and Smart as well as lower incidence of non-connection.
Needless to say, the mining story is alive and kicking. We may be seeing some consolidation in AT, LC/B, MA/B and ORE, but I would not lose sleep over it. as a matter of fact, I would like to see further consolidation on these stocks so I can pick up a bit more. Look at PX today. It was not affected by the sell off in other mining shares simply because it has very stable earnings, and people are very confident with it on account of PX’s track record. I think the others are indeed building up their own track record and will be showing stability in earnings in a matter of time. I have always maintained that with mining stocks, it will always boil down to the mineral resource that is owned by the company.
All is well that ends well, and today was a good day in the market. Now, to go and enjoy my dinner!