[ANALYSIS] Search for stocks that continue to sizzle

The market resumed trading this week with the same gamely fashion it had before it closed last Wednesday in observance of the Holy Week for the Lenten season.  

This gamely stance of the market has been happening since several weeks back. In the same vein, the market likewise starts to lose steam as it approaches the 7,000 psychological level of the major Philippine Stock Exchange index or PSEi.  

When this happens, the market is also observed to always bounce back whenever it gets down near the 6,800 level or so, creating a visual pattern of a trading range that could be further described as some form of price consolidation.

Consolidation is a term used in technical analysis that refers to a certain period when the trading prices of a stock or market does not cross its support and resistance lines. The stock or market movement is confined to a well-defined pattern that doesn’t rise over its previous high, or doesn’t fall under its recent low or lowest in the past.

When the top of the trading range is broken, the price of the stock or market will normally move upwards to higher levels. But not until this happens, the direction of the trading range of a stock or market cannot be clearly predicted.

Of note, too, existing economic data before the Lenten break, on the other hand, showed that our GDP for the 4^th quarter of 2023 was 5.6%. This is lower than the 3^rd quarter’s 6.0% figure. Interest rate, on the other hand, continued to be unchanged at 6.5% till the month February. Inflation was monitored at 3.4% in February, which is about 0.6 points higher from the 2.8% of January. In addition, there is a strong feeling among market punters and analysts that inflation may have started to decelerate lately, which may lead to the likelihood of a potential interest rate cut.  

In this connection, several stockbrokerage houses have already sounded their investors to expect sustained earnings growth from several large caps and growth stocks in the market.  

With the studies showing that the composite stocks of our “PSEi have more comparative attractive valuations vis-a- vis their Asian counterparts on a P/E and P/B basis,” Jofer Gaite, president and chief trader of Westlink Global Equities, Inc., and Joel de la Pena, market strategist and chief trader of H.E. Bennett Securities, Inc., are strongly convinced that we may be seeing an impending market rally.

Picking up from previous and latest news articles, and market calls from stock brokerage houses, there are no less than 20 stocks that you can readily choose from the market that are seen to have the potential to further sizzle with higher reward and lower risk potentials in the immediate to medium term.  

Not strictly listed and categorized according to their order of importance or potential returns but by, at least, their acceptable level of market liquidity, they are as follows: 

GT Capital Holdings, Inc. (GTCAP)

JG Summit Holdings, Inc. (JGS)

MacroAsia Corp. (MAC)

International Container Terminal Services Inc. (ICTSI)

Filinvest Development Corp. (FDC)

SM Investments Corp. (SMI)

SM Development Corp. (SMDC) 

MONDE Nissin Corp. (Monde)

Jollibee Foods Corp (JFC)

DMCI Holdings (PSE: DMC) 

Robinsons Land Corp. (RLC)

CITICORE Energy REIT Corp. (CREIT)

Ayala Land, Inc, (ALI)

Ayala Corporation (AC)

BDO UNIBANK, Inc (BDO)

Metropolitan Bank & Trust Co. (MBT)

BANK of the Philippine Islands (BPI)

RIZAL COMMERCIAL Banking Corp.’s (RCB) 

PLDT Inc. (TEL)

San Miguel Corporation (SMC)  

Supplemental market commentary

According to stockbroker Rene de los Reyes of Abacus Securities Corporation, his company estimates that GTCAP’s forward P/E ratio is about 5.2x only – making it still one of the cheapest issues in the market despite being among the highly traded index stocks for the longest time.    

As defined, “The forward P/E ratio (or forward price-to-earnings ratio) divides the current share price of a company by the estimated future (“forward”) earnings per share (EPS) of that company. For valuation purposes, a forward P/E ratio is typically considered more relevant than a historical P/E ratio.”

For valuation purposes, a forward P/E ratio is typically considered more relevant than a historical P/E ratio.

GTCAP’s core net income grew 81% higher over and above its reported FY 2022 results. Its auto subsidiary and, to some extent, by the recovery of its property company reportedly contributed significantly in the increased earnings of the conglomerate.  

Another is MacroAsia Corp. (MAC).  The company’s attributable net income for FY 2023 hit P851.14 million, which was double its earnings in 2022.  Management is confident that the company’s net income is expected to continue with its further upward trajectory this year on the basis of the inroads it has made to penetrate new markets as part of its initiatives during the difficult pandemic period while coping with the robust return of aviation travel in the key airports where the company operates.

Watch out for SMC, too.  Not just that SMC’s net profit surged 67% to P45 billion last year but there is a big event that will soon unfold to possibly drive further growth across its business segments that you might regret, you did not give this market tip even an iota of curiosity.  This will could make the company a darling of the market as it was in yesteryears.

The Department of Energy (DoE) also recently launched the bidding for coal, petroleum, and native hydrogen exploration in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) and other parts of the country.  

The DOE also announced that known oil and gas exploration and production players in Asia, North America, and Europe, including local players have displayed a keen interest in evaluating our country’s petroleum potential.  In this connection, you might want to bet on one of the local oil exploration companies the public has long taken for granted.  

In the meantime, the market’s next resistance levels are placed somewhere the 7,100 and 7,500 regions.  And if the average P/E multiple of the market will rise within the vicinity of 14.8x, my phantom adviser says the market could hit 8,000 before we all expect it to happen. Abangan. – Rappler.com

The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise.  Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity.  You may reach the writer at densomera@yahoo.com.