Pick of the Week: TEL

The Philippine Stock Exchange Index has been sluggish for the past week or two despite the strong finishes and price movements of most of its listed stocks due to the fact that TEL (PLDT), the Philippines top and leading telecommunications company, is on a downtrend. TEL has a huge influence on the stock market index.

Below is TEL's chart:

TEL is bound to bounce for the following reasons:

1.) It's price is currently at its trend support.

2.) Major indicators MACD, RSI, and STS are all low (so low for that matter). Low or oversold indicators always bounce back up. Volume is good as well, stock is active.

3.) Despite the massive sell off, huge brokers such as ATR Kim Eng Securities, Thing-on Securities Ltd., SB Securities Inc., DBP-Daiwa Securities, Regina Capital, Papa Securities Inc., and First Orient Securities bought huge number of TEL shares.

Quotes that may fit TEL well:

"Sell when everybody is buying and buy when everybody is selling"

"Buy on fear, sell on greed"

The sell off could still be the effect of lowering of PLDT's credit rating by Moody's. So caveat.

Nevertheless, TEL is worth watching.

Target entry price: P2,550

Target sell price: P2,700 (5.88% upside minus commissions and fees)

Target cut loss point: P2,500 (psychological support)

Index Stock Picks (Apr. 17-21): MEG, RLC, and URC

MEG, RLC, and URC's charts are looking great and are primed to go further north this week. Here are the charts of the three stocks:

RLC:

After breaking 17, RLC has been consolidating and moved sideways for more or less 3 weeks. It made 17 its psychological resistance. RLC had its first major price action in 2-3 weeks which may prompt a possible breakout. If RLC will break past 17, it will most likely post a new high. Unchartered territories are were stock prices surge fast. RLC's STS also indicates strength. RSI is not yet overbought and volume is good.

Buying Price: 17 or below (ideally 16.8 or lower)

Selling Price: 17.45 or higher

URC:

If URC breaks its resistance at 65, this is primed to break out. This has been consolidating for quite some time already and is ripe enough to go back up. Price action, volume, STS, and RSI are all positive. All we have to do is to wait for URC to go higher than 65. As shown in the chart, URC is also on its 20-day SMA which can also be considered as a support.

If 65 is broken, URC will be on a new all-time high.

Buying Price: 65 - 65.5 (as long as it is with good volume)

Selling Price: Whenever you are comfortable (be sure its higher than 2% to avoid commission loss)

MEG:

For a stock like MEG, its quite puzzling why did it continue to go down despite its good fundamentals and outlook. Looking at the bright side, it has brought the stock to a very undervalued level.

However, MEG already broke out from its downtrend resistance for nearly 2 months already and is starting to gain some serious momentum. Below is MEG's short term chart.

MEG has bounced from its uptrend support and at 61.8% Fibonacci (check it out). Price gradually went up in the last 2 days and a strong price is very probable within the week. RSI is still far from being overbought and STS may cross up. MEG's volume is also good and may increase if price will surge.

Buying Price: 1.97 (if price will gap up, 2 or lower)

Selling Price: 2.1

Stock Pick: PXP

The oil sector has been exemplary well this year. Stocks like OV and OPM (considering that these are third liner stocks) went up by leaps and bounds. Oil stocks have high face values and are expected to continue to go up. One stock in the oil sector is PXP.

The chart below is PXP's chart since its IPO last September 2011. Since it retraced from its crazy day 1 price action, PXP has gone up from P4 to as high as P14 in just a matter of roughly 5 months.

Why is PXP worth watching?

[1] PXP is currently on its all time uptrend support.

[2] PXP is currently on its 32-day SMA.

[3] From P10, PXP is currently on 61.8% Fibonacci.

Philex Petroleum Corp.'s 2011 net income totaled P537.5M. It's earnings included P271.4M from Forum Energy PLC, a 64.45% owned subsidiary, and a non-recurring gain of P443.7M from the restatement of the company's investment in Pitkin Petroleum Plc. when Philex Petroleum's holdings in Pitkin was diluted from 21% to 18.46%.

PXP's highlights last year included the completion of the first exploration sub-phase of SC72 by Forum Energy and the start of commercial production from the Brixton Energy coal project in Zamboanga Sibugay.

In 2012, Philex Petroleum Corp. is looking forward to the following:

[1] Commerciality of the hydrocarbons within the SC72 contract area;

[2] Develop a sustainable revenue stream from our coal business;

[3] Pursue new opportunities including a participation in the upcoming Philippine Energy Contracting Round

Stock Pick: MPI

For roughly a year, MPI has been moving below its trend resistance until it broke past it last December 2011 (mid-December) as shown in the chart below.

Interestingly, despite the strong momentum that the market has gained since January, MPI continued to consolidate.

Below is MPI's chart since breaking past the trend resistance.

It can be seen that MPI is still on a downtrend. However, there is a possibility of a reversal. Here are the reasons why.

SCTEX and NLEX - Metro Pacific Tollways Corp. (MPTC) allocates P2.3B for NLEX and SCTEX. According to MPTC president Ramoncito Fernandez, a bulk of the P2.3B (P2B to be exact) will be allocated for the Segment 9 road project which is a part of NLEX. The other project is the Segment 10 road project. Segment 9 will connect McArthur Highway in Valenzuela to NLEX while Segment 10 will connect McArthur Highway to C3 Road. For the record, MPTC controls the concession of the 84-kilometer NLEX.

However, MPTC is still waiting the final word from Malacanang for SCTEX.

MPTC subsidiary Manila North Tollways Corp. (MNTC) will operate and manage SCTEX for the next 33 years.

Hospitals - MPIC is eyeing to have a nationwide network of 15 hospitals in the next five years and a total of at least 5,000 hospital beds which is in line with the company's P10-B goal by 2016. The group is currently the largest hospital operator in the country with 1,800 bed capacity.

MPIC just recently bought 842,454,380 common shares or 43.5% stake of Asian Hospital, Inc. Asian Hospital is the first major private hospital with tertiary care facilities in southern Luzon. It has a 217-bed capacity and stands on a 17,258 square meter campus.

MPIC is also in the talks with Capitol Medical Center (CMC) which has a 300 bed capacity. CMC is one of the leading and premier medical institutions in Quezon City with more than three decades of delivering quality health care assistance. 

The 5 other hospitals that MPIC controls are: Makati Medical Center, Our Lady of Lourdes Hospital in Sta. Mesa, Riverside Medical Center in Bacolod, Cardinal Santos Medical Center in San Juan, and Davao Doctors Hospital in Mindanao.

MPIC is also eyeing hospitals at Northern Luzon, Central Luzon, Southern Luzon, Western Visayas, Central Visayas, Northern Mindanao, and Western Mindanao.

Core Income - MPI earned P5.1B in 2011 exceeding their P5B forecast. MPTC pushed MPI's profit up because of the strong demand. MPTC earned P1.48B in 2011. Earnings beat estimates because of the low operating expenses and the high earnings contribution from its 46% owned Tollway Management Corporation. MPI earned more than the forecast despite the unmet expectations from Maynilad and Meralco.

For 2012, MPI sets P23.2B budget. P11.9B will be used for Meralco, P8.4B for Maynilad, P1.8B for the hospital group, and P1.1B for the tollways.

MPI has a face value of P4.67.

However, MPI has a little cause of concern (at least short term) because of the gap up. Gap ups are normally being filled thus the ideal entry point is when the gap is being filled.

But since MPI has posted very strong fundamentals, it may continue its trek up. Notice that the closing price is also at the short trend resistance. If it breaks past its resistance, it is most likely to surge. If not, the gap may be filled.

Long term, this is a gem.

Stock Pick: GREEN

Before going down to what GREEN has in store, let us first give a little background about this company because most traders probably aren't familiar with this one. Greenergy Holdings Inc. or GREEN, formerly known as MUSX Corp. is a listed renewable energy firm led by businessman Andrew Tiu.

The company used to create, design, develop, and manufacture semiconductors until it became a holding company. Though GREEN's semiconductor business remained under it's umbrella name Music Semiconductors Coroporation or MUSX Corporation, it started to venture and focus to the field of renewable energy in the latter part of 2010. In June 22, 2011, SEC approved the company's proposal to change its name (MUSX) to the current one (GREEN).

GREEN is considered as a third liner stock. This stock lacks volatility and volume but it may change soon. Earthright Holdings, the parent firm of listed AgriNurture Inc., bought a total of 250 billion GREEN shares for P250M at P0.01 per share via private placement. Greenergy's president and chief executive Andrew Tiu owns Earthright and AgriNurture, Inc. The private placement increased GREEN's capital stock from P1B to P2B.

Apart from the private placement, Greenergy are also in talks for a possible purchase of a Taiwanese renewable energy firm. GREEN said in a PSE filing last Thursday (Feb. 23, 2012) that is board approved a plan to enter into negotiations with Grateful Strategic Consultants Co., a company that operates two biomass plants in Taiwan, for a possible acquisition.

Coincidentally, the general manager of the Taiwanese firm, General Manager Chung Ming Yang, is also a director in AgiNurture, Inc. which is owned by Tiu.

Apart from the private placement and the possible acquisition of the Taiwanese firm, Greenergy is also planning to put up at least 1,000 MW (megawatts) of wind power facilities in the country in the next 10 years and is said that will prioritize spending of up to $200M on wind energy.

Other than its plans on wind energy, Greenergy also looks forward to do projects on biomass, geothermal power, solar power, and hydroelectric power.

Greenergy also had a recent joint agreement with Chinese firm Tianjin Tianabao Investment and Development Corp. to put up renewable energy projects.

The chart below shows GREEN's price action since it changed its name from MUSX.

The chart suggests some strength. Here's why:

1.) Its SMA1 (32-day SMA) is moving fast and higher from the other SMAs (SMA2 at 65 days and SMA3 at 130 days). If a shorter SMA moves higher than the longer SMA, it indicates strength. 

2.) Though GREEN's price may look like moving inside a channel, price at 0.12 is well supported and became GREEN's immediate value. Notice how many times did it open below 0.12 but it still managed to close at 0.12. The surge from 0.11 to as high as 0.15 may have been prompted by the rumor about the possible acquisitions and the private placement.

3.) Since the surge during the first week of February, the resistance at 0.12 became its support. If you played GREEN during these times, you could have pocketed instant 8.33% everyday by buying GREEN at 0.12 and posting immediately at 0.13.

4.) Because of the news, GREEN is now a fundamentally sound stock. GREEN may have consolidated and needs a catalyst for it to surge again. However, since the news is already out, we could expect for GREEN and Andrew Tiu to release disclosures from time to time particularly regarding their acquisition in Taiwan or their planned projects.

At it's current price at 0.13, it's immediate TP could be its high at 0.15. That is some 15.38% gain.

Last Feb. 24, 2012, GREEN's latest trading day, it finished with only 54 trades for a total of 272,900,000 shares or only 4.27% of its outstanding shares. ATR Kim Eng bought 72,000,000 shares for a total of P936,000 and sold none. ATR Kim Eng also ate up the shares when the day closed which meant that such broker may have been positioning itself for a possible price surge.

Analysis:

GREEN is currently at 0.13 which could possibly be its new support, the same thing that happened to 0.12. MACD is showing some reversal and may cross. A cross between a shorter moving average (blue line) going up the longer moving average (orange line) indicates strength. RSI also crossed its resistance which is another indicator of strength. However, its RSI must break past 55. Right now, its RSI is at 54.59.

MBT: Who will win, resistance or support?

MBT is one of the best performing stocks in the financial and banking sector. In fact, it is one of the big reasons why the financial sector has been doing exemplary well this year. Below is MBT's long term chart.

MBT is currently at its long term resistance which theoretically suggests that MBT will go back down. Below is MBT's short term chart which suggests a different thing.

MBT is currently on its short term uptrend support which, again theoretically, suggests that MBT should bounce and continue to go back up. Because of the strong momentum that it has gained and considering the strength of the financial sector and even the whole index, MBT has a greater chance of bouncing back up.

However, it's MACD and RSI are suggesting some weakness which may make the long term trend resistance more significant than its short term trend.

Citiseconline has set a face value of 108 for MBT which is 30% away from its current price at 83.15.

Stocks has been breaking all time highs this year and MBT might just do the same. Three possibilities: [1] MBT will simply break it's long term resistance, [2] MBT will consolidate before breaking out, or [3] MBT may sink lower giving more buying opportunities.

PSEI: Correction Bound?

The Philippine Stock Market Index has been stellar since 2012 stepped in. The index has gone up from a little over 4300 after 2011 to as high as 4950 (as of this writing) or roughly 14% in less than 2 months. We are officially in a bull market. A bull market is a market condition wherein almost everybody is a genius, even the beginners. Almost all the stocks you buy go up if given some time resulting to hefty gains.

However, looking at it short term, the index may go lower for a few days (which is quite rare for 2012).

The chart above shows that the index, which is currently at 4950, is near its possible psychological resistance at 5000. It is also inside an uptrend channel which pegs its resistance at 5000.

However, PSE's RSI is still far from overbought which may, just may, push it higher past 5000.

Whether PSE corrects at 5000 or will break past it, it doesn't matter. Oil, mining, the financial sector, real estate, and everybody's new favorite, the basuras are doing more than just fine, as well as other sectors. This bull run has a long way to go because this has been the long overdue run last year (Japan tsunami, chaos in the middle east, European debt crisis, who cares about Europe especially Greece these days by the way? haha!) and companies in the Philippines has been so fundamentally excellent. Prices will continue to go up so let's enjoy the feeling of being a genius while it lasts. haha!

You can disregard the index but if you want a more better return, consider trading with the index's momentum.