Monday, June 10, 2013

My June 2013 Stock Picks

My June Stock Picks

I always had a disclaimer that I was afraid that the stock market was growing too fast. Now that my fear has come to pass, I got less reason to be afraid of. The market has corrected, and I believe it's still correcting. It's relatively a good time to buy this month when the market is down (As long as PSEi is below 6900).

My list is more of a guide on which stocks to buy, it's still up to you to research about it, and definitely up to you WHEN to sell them (E.g. When you feel we have a major correction happening, or in time of crisis / recession, or when you reached your target price, or on whatever technical analysis you may have.)


MEG / MEGW1
[Buy below P3.9 / P2.9] Even if it was removed from MSCI Index, I believe Megaworld Corp (MEG) is still undervalued compared to other property units. This is for long term holding. COL Financial's target price for Megaworld is P9 which I think is too good to be true, although MEG has a lot of growth potential. Its current P/E at P3.83 is 15.3, still relatively low compared to other companies in the same industry. Plus what I love about MEG, is it has its warrants counterpart MEGW1 which has more room for profit growth (but less liquid).

There is ONE problem that I see though, which would make it a bumpy ride: In my previous post, I speculated that Alliance Global (AGI. Parent company of MEG), will merge its property units. If this is true, MEG will have a similar fate to SMPH. In which SMPH's (the surviving entity) share price went down and its acquisitions (SMDC, HP) went up. It is possible that MEG's share price will go down temporarily because of this. Anyway, it's still a theory.


SMPH
[Buy below P19] After the merging of SM's property units (July 5?), the upside is big (~18%) if it reaches its 52-week high. But the new SMPH will be bigger and more valuable since it will now hold all the property stake of SM. I'm yet to compute the exact figures.


BDO
[Buy below P89] It consolidated around 92-93 (~8% upside) before and has a 52-week high of 99 (~13% upside). Even though the upside is not that great and its P/E is already high (21), BDO's popularity makes it a good candidate for a quick play. And basing on its Q1 earnings, its growth maybe above expectations.


TA
[Buy below P2.40] Based on its Q1 earnings, its growth potential is also promising. Since its shareprice already went up, I would wait for an opportunity to buy it at a lower price. Also there is possibility that TA will give property div to its oil exploration company.


If I wrote this last week, I would've added BPI [Buy below P94], MWC [Buy below P37], AGI [Buy below P23] and ALI [Buy below P31]. You can still wait if their prices will go down this month. I bought BPI when PSEi was in 6600 levels, but now it has gone up and the upside is not that great anymore. Same goes for MWC (my favorite stock, I buy it whenever there's a great opportunity for it). AGI, like BDO, is very popular; its share price bounces back quickly when the market recovers.

There are a lot of bargains in the stock market, since the market has already corrected significantly (and may continue to do so), this time is a good opportunity to buy (wait for days that the market is down). But still be cautious, again, the correction may not be over, I am guessing it will still continue for around 1-2months. But hey, buying this month is definitely better than buying last month (esp. at 7400 PSEi). You are lucky if you followed the SELL IN MAY AND WALK AWAY strategy, hehe.

Another thing, this year, and possibly for a few years more, our construction industry is on a boom! Cement companies may be a good long-term investment (HLCM, LRI)

At a time like this (when market goes down significantly), I check the list of blue chips sorted by its change from its 52-week high. I personally stay away from Lopez companies, Ramon Ang companies (SMC, etc), and Airlines unless the deal is too good to pass.

Good luck and happy investing!


Obligatory disclaimer: Above recommendations are just personal opinion, follow them at your own risk!


2 comments:

  1. sharlette dimarucutJuly 24, 2013 at 1:00 PM

    thanks for this article Manny! I was actually researching about SMPH. Good to hear that it will be bigger now since it will now hold all the property stake of SM. :) Happy Investing!

    ReplyDelete
  2. You're welcome. Thank you for reading. Note that even if it's bigger, doesn't always mean it is undervalued. I will post my review of this again, once they have finalized the merger and the total outstanding shares are disclosed :)

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