Quantcast
Latest Stories

Go for large-cap stocks, experts say



MANILA, Philippines—The fall of the stock market from record-highs to its current level gives investors the opportunity to sift through the rubble and take positions. The Inquirer’s Doris C. Dumlao asked four stock market veterans to name their three most compelling stock picks given the current market environment. Not surprisingly, this quarter’s poll revealed choices dominated by large-cap stocks which are part of the main-share Philippine Stock Exchange index.

Harry Liu

President

Summit Securities Inc.

Manila Electric Co. (MER)

“Basically, power would be a basic need in the country’s economic upturn and right now, it is one of the industries we need to catch up on. I think Meralco will be at the forefront in the economic upturn. It’s doing something like 16.5x P/E* (price-to-earnings) ratio for 2013, so it’s within the price range that I would consider attractive. I expect this to trade above P300 per share or the level before the recent decline. The recent drop is an opportunity to take position in Meralco, the biggest in power distribution which is also going into power generation.”

Megaworld Corp.

“I look at it as the mother company of all Andrew Tan property-related companies. At this time, it’s doing at about 14x P/E* ratio … Since it’s doing a mixed property development, I feel that eventually, Megaworld would go back (to higher valuations). It’s one of those at the forefront (of property development), so Megaworld is worth considering for investment. It has ELI (Empire East Land Holdings—a mid-market residential developer) and GERI (Global Estates Resorts Inc.) which is tourism-oriented. Megaworld is already there, not aggressive, very successful and has other businesses around it.”

Rockwell Land

“This property company has just started. It’s held by the Lopez group and led by a good president, (Nestor) Tong Padilla. This is a property company that will join the big boys. It is backed by the Lopez group and led by a very capable person who has shown his ability to grow Rockwell Land. They have shown the way to community building. It has listed by way of introduction—not yet doing an initial public offering— and, looking at its price versus book value, it’s not too far. It can also go into tourism-oriented property development. This is for long-term growth potential.”

Joseph Roxas

President

Eagle Equities

Metropolitan Bank and Trust Co. (MBT)

“I think it’s one of the cheaper banks. Its price has gone down only because it announced a 30-percent dividend. In general, foreign investors don’t like big dividends because there’s a big reduction (on their net take) because of withholding tax. It’s because of that dividend tax adjustment that the bank’s price has fallen. But Metrobank’s earnings potential is good. It has large nonrecurring earnings (from the sale of stakes in affiliate automotive and power generation businesses) and huge recurring earnings. It is trading at about 2x book value, in line with peers, but it has greater growth potential.”

Melco Crown (Philippines) Resorts Corp. (MCP)

“On a speculative basis, MCP has a fighting chance. Just like Bloomberry before, the hype was during the run-up to the opening. Whenever a new casino nears its opening date, that’s where the play is, so it’s good to buy ahead of its opening.”

Oriental Petroleum and Minerals Corp. (OPM)

“People look at it as speculative but it appears to me that Oriental is now undergoing a change in character. They don’t do a lot of exploration drilling anymore. Any drilling they do is well-calculated to produce. It is now drilling Galoc Phase 2 which will increase production of Galoc field to 15,000 barrels a day or double the current production. It is cheap, trading at 2 centavos, and it gets a premium price for its oil, as its crude is sweeter than the benchmark Dubai crude. OPM changed its primary purpose to include electricity and this shows a shift to less speculative pursuits.”

Marvin Fausto

Chief Investment Officer

Banco de Oro Unibank

 

Petron Corp. (PCOR)

“Petron is undergoing a major structural change in its refining operation called RMP2 (Refinery Expansion Project-2) that will allow the company to produce high-value premium while product. The plant is scheduled to increase production capacity from 94,000 barrel to 180,000 barrels per day beginning the fourth quarter of 2014. The effect may be likened to Bankchak Petroleum of Thailand which modernized its refining plant. Banckak Petroleum stock price tripled once the upgraded plant started operations.”

Ayala Land Inc. (ALI)

“The company’s massive expansion in real estate projects coupled with the low interest rate environment would generate strong growth for ALI and increase its value. Performance continue to surprise on the upside, giving room for analysts to upgrade their numbers for the company moving forward.”

Alliance Global Group Inc. (AGI)

“With the company’s exposure in diverse and fast growing sectors, AGI is projected to generate above average returns. AGI’s major investments in gaming (Resorts World), property (Megaworld Corp.), beverage and spirits (Emperador Distillers), Tourism (Global Estates Resorts Inc.) and food (McDonald’s fast-food chain) are expected to contribute to a strong performance in the coming years.”

Alex Pomento

Head of Research

Macquarie Philippines

Ayala Corp (AC)

“It’s a key Philippine proxy with dominant positions in property, banking and utilities. It’s building 900 megawatts in gross generating capacity for its power initiatives and is at the forefront in PPP (public-private partnership) bidding due to balance sheet size and track record. Real time net asset value (NAV) of P727 implies a 22-percent discount on two-year compounded annual growth rate (CAGR) of 18 percent until 2014—higher than market earnings growth.”

Metropolitan Bank and Trust Co. (MBT)

“We prefer MBT because of the certainty of its earnings growth and that it has boosted capital in preparations for the Basel3 implementation next year. MBT has sold down its ownership to several non-core assets (Toyota and Global Business Power) which should translate to hefty one-time gains boosting its bottom line this year by at least P4 billion, which should push earnings to P20 billion this year. Increased earnings will be supported by improving margins (3.8 percent net interest margin) and a loan growth of at least 12 percent.”

Philippine Long Distance Telephone Co. (TEL)

“We see potential for better-than-expected margin recovery amidst successes made in post-paid subscriber acquisition. It has a resilient 4-5 percent earnings growth this year with potential upside from peso depreciation as 30 percent of revenue is dollar denominated. Dividend yield of 5.8 percent provides support and it typically exhibits above-market performance in the run-up to the bi-annual dividend this August.”

Legend:

*P/E refers to how much investors are willing to pay for a stock relative to prospective earnings per share.


Follow Us


Follow us on Facebook Follow on Twitter Follow on Twitter


Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Alex Pomento , Harry Liu , Joseph Roxas , Marvin Fausto , Philippines , stock picks , stocks

  • bit coin

    Too late to buy blue chips. The owners of these companies have just finished selling most of their shares through the bourse or through private placements. Anyone who would believe these analysts will be left holding the proverbial “BAG.”



Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94
Advertisement
Advertisement

News

  • Seabed search for missing Malaysian jet to widen
  • Lacson rejects calls to name ‘pork’ execs
  • Obama due in Seoul as North Korea nuclear test fears grow
  • Hold departure order out vs Corona, Singson
  • Malaysia to release MH370 report–PM
  • Sports

  • Michael Phelps loses to Lochte in comeback meet
  • Sharapova advances to Stuttgart quarterfinals
  • Galedo caps ride of redemption
  • Beermen, Express dispute second semis slot today
  • Lady Agilas upset Lady Bulldogs in four sets
  • Lifestyle

  • ‘Recovered’ Banksy works on display ahead of sale
  • Marinduque: Visiting the ‘palm of the ocean’
  • First at Vatican in 60 years
  • How Jing Monis Salon gave Krissy the pixie
  • Want to be a supermodel? Work on your inner beauty, says Joey Espino
  • Entertainment

  • Paul McCartney to play at Candlestick concert
  • Kristoffer Martin: from thug to gay teen
  • Has Ai Ai fallen deeply with ‘sireno?’
  • California court won’t review Jackson doctor case
  • Cris Villonco on play adapted from different medium
  • Business

  • PAL hailed for ban on shark fin cargo
  • BSP to change tint of P100 bill
  • Nielsen sees car buying boom in the Philippines
  • How author of best-seller exposed ‘one percent’ economic elite
  • Bangko Sentral readies new bank lending rules
  • Technology

  • Cloud strength helps Microsoft earnings top Street
  • Vatican announces hashtag for April 27 canonizations
  • Enrile in Masters of the Universe, Lord of the Rings?
  • Top Traits of Digital Marketers
  • No truth to viral no-visa ‘chronicles’
  • Opinion

  • Corruption not invincible after all
  • Editorial Cartoon, April 25, 2014
  • No deal, Janet
  • Like making Al Capone a witness vs his gang
  • MERS-CoV and mothers
  • Global Nation

  • Filipinos second-shortest in Southeast Asia
  • China welcomes PH apology
  • Only 4 Etihad passengers not accounted for
  • Abandoned in Malta,15 PH seamen return
  • Senator hopes PH will also get same vow
  • Marketplace