Prospects for the next month or so
Last week’s net gain of 127.77 points or 1.89 percent may have been pointless in the local market’s attempt to score real gains were it not for the trading results of other equity markets. Take note it shed 100.26 points on Monday and another 64.57 points last Friday.
Looking back, the local market has been making a comeback since it dipped to its lowest close for the year on Jan. 22 at 6,208.05. At the time, the market was down 23.71 percent from its 52-week session high of 8,136.97 and 23.62 percent down from its 52-week closing high of 8,127.48, rendering the market to have technically entered bear territory.
But in only a matter of 35 days since the January closing low, the market managed to bounce back halfway to its year’s highs—again.
SMC stocks
Take for instance San Miguel Corporation’s (SMC) stock price. SMC was trading within the range of P44.46 to P50.04 per share in the last quarter of 2015 and then hit a closing low of P44.19 apiece on Dec. 14. Its lowest close was on Sept. 22, 2015 at P43.38.
By Dec. 31, SMC had about 2.38 billion outstanding shares out of 3.28 billion shares issued and 0.90 billion shares held in treasury.
When the market fell on Jan. 22, SMC’s share price had already climbed to P60 per share. SMC shares were up 19.94 to 34.95 percent based on its lows and highs in the last quarter of 2015.
At it’s closing price of P44.19 apiece on Dec. 14, 2015, this meant SMC shares have already gone up by as much as 34.78 percent in just a month or so.
When the market resumed its advance after Jan. 22, the price of SMC shares also advanced. On Jan. 29, the price was able to climb by another 21.5 percent per share at P72.90.
If you bought SMC shares when the market started to recover during the second week of February (but SMC shares dropped between P67.04 to P70 per piece by then), you could have been 10.36 to 6.86 percent richer by the end of last week.
Were you lucky enough to buy SMC shares last Dec. 14 at P44.19 and sell at last week’s price of P74.80? Your returns would be as much as 69.3 percent, enough to make you quit punting for the time being or even for the whole year.
Remember, a personal best return on investment of 20 percent in 2015 was not only very good, but definitely fantastic. Take note that the market ended negative 13.53 percent by the end of last year.
Bottom line spin
The potential profits you could have earned in SMC in the last three months or so was like the market’s climb—on the way up or down—within the same period.
Based on some technical yardsticks, the market’s pace, or of SMC for that matter, may not yet lead to a full blown advance anytime soon.
What can be expected is that, like in SMC’s price advance, there will be a slowing down in the market’s prospects in the next month or so.
Yet, be on the alert. While the market’s advance may have been quite too fast and too soon as technically indicated, it has latent strength to stage a big advance anytime. Like the current stock price of SMC, it is trading at the very low multiple of 7x earnings only (based on SMC’s reported first nine months financial results).
(The writer is a licensed stockbroker of Eagle Equities, Inc. You may reach the Market Rider at [email protected], [email protected] or at www.kapitaltek.com)
