FLI: Ready to fly?

FLI is a stock worth looking at. The chart below shows that FLI is currently resting near its channel resistance which if broken may push FLI to go up fast.

Will FLI break past its resistance or breakdown and head back down? In my opinion, FLI may break it. It's MACD and RSI are suggesting that FLI has a good potential of going back up. RSI is far from overbought which, should buying will start, indicate that there is a very huge room for growth.

FLI is fundamentally rich as well. A week or two ago, Filinvest reported different projects worth P5.2 billion in different major cities. With that being said, we can expect FLI to have a series of developments and projects in the years to come.

Stock Pick: EDC

EDC is a stock worth looking at for this week or probably next as well. EDC's chart below suggests that it is resting on its support/resistance at 6. Should EDC break past such resistance this week, it may have another trek back up to 7.

The chart below is EDC's price action in 4 months time. It's price is currently at either its support or resistance indicated by lines 1 and 2. Line 1 is the resistance and line 2 is the support. Which of which is true? Only future price action will tell.

However, EDC's current RSI suggests that selling is stronger than buying. Should this hold true, Fibonacci suggests that the next possible entry points are at 23.6% Fib which is at around 5.93 or at 38.2% Fib which is at 5.8. If both Fibonacci supports fail to hold, next entry would ideally be at 50% Fib which is at around 5.7.

Despite EDC's current RSI, it may still get back up considering that Dow is strengthening (temporarily). Line 2 should be monitored as it is EDC's support. EDC has gained some strength and should be a stock worth looking at.

On the fundamental side, EDC's interim EPS is way much higher than its projected year end EPS and its P/E ratio is quite low at 40 in comparison to other stocks in its sector.

Rebirth of Real Estate

The properties sector, or real estate to be more specific, is a sector that is worth looking at on 2012. Properties are popping up like mushrooms in almost everywhere which means significant profits for companies in the real estate business.

BHI has been spectacular during 2011 going up by roughly 900% in just three months before going back down giving a year to date (as of this moment) of some 400% increase since it surged and retraced. From as high as 0.45, BHI went back down to 0.3 and even down to its current 0.2-0.22 levels after the news broke out that it is going to be suspended for three months prompting fear and panic.

At its current levels (0.2-0.22), BHI is somewhat cheap and once the renovations in Boracay is done, expect BHI to wake up once again.

Two other stocks that are worth looking (or probably even more worth looking) are ALI and FLI

ALI reported an increase of 30% of its net income in the third quarter. Ayala Land, the property arm of the oldest conglomerate in the Philippines, eyes to meet its 20,000-unit target by yearend. ALI's 9-month income was marked at P5.932B, a 33% increase from its P4.445B record of the same period last year.

Mid-level brand condominiums Avida is expected to continue ALI's rise throughout the year and expects to sustain its growth in 2012.

FLI on the other hand will start its P5.2B worth of projects late this year or 4th quarter of 2011. Filinvest cited projects on locations such as Ortigas, Sta. Mesa, Pasay City, Filinvest Corporate City, Cebu City, and Davao City as future developments.

FLI also increased its 9-month profit by 15% from P1.45B last year to P1.66B this year.

Fundamentally, FLI has a low P/E ratio at 13.9024, quite ideal to buy and its interim EPS exceeded its projected EPS. FLI has a projected yearend EPS of 0.08 while its interim EPS as of Nov. 11, 2011 is already at 0.082.

Correction or Recession?

For months, Greece and probably the whole of Europe has been struggling financially over debt. Probably an unpopular decision that made lots of people furious, Greek PM George Papandreou called out a referendum for Greece's latest bailout package. Is this something good or not? We never know but probably what is certain is that the market may continue to move sideways or probably down if Greece and Europe can't show any signs of development.

As far as PHISIX is concerned, some stocks have shown resiliency. Because of the uncertainty in Greece, I think that the mining and oil sector will still hold strong. Anything related to oil (such as power generation and energy) may have some momentum as well.

Since nobody can predict the market, stocks may appear cheap now but still may continue to go lower. Keep in mind that during a market recovery, blue chips move so fast (just like DMC and JGS after 2008) preceded by penny stocks.

Two scenarios: [1] Market moving sideways, or [2] Market going down. So what are we going to do in each scenario?

Scenario 1: We have noticed Dow has been moving inside a channel. It drops for two or three days and goes back up for almost the same number of days. We can take advantage of such behavior by anticipating when will it go up and down.

Scenario 2: Because of the turmoil in Greece, it might be wise to stay away from the market for a while. This is a very risky time for both traders and investors. For investors who are looking for the best value for their money, wait a little longer and get in when the market shows some legitimate strength. For value investors, stocks are cheap right now and whether or not they continue to go down, the upside is huge.

Rainbow After the Rain

The crisis that has hit Europe, Greece in particular, so far has caused both reasonable and exaggerated fear. Reasonable in a sense that the markets are bound to go down in the next few weeks or even months not until the said crisis is resolved and exaggerated in a sense that some traders/investors are making it look worse than it seem. Either way, major markets are going down and not even the good economic state of the United States can spare it.

Patience is indeed a virtue and on an investors' point of view, the rewards that may follow the recession may not just be great but spectacular. Let's see how did some blue chip companies do after the 2008 financial crisis.

DMC - For as low as P2 per share in December 2008, DMC went up to as high as P48 in May 2011 or some 2400% increase in 2.5 years. DMC was around its previous high of P14 before it went down to lower the P2 levels.

JGS - JGS was around P2 per share in December 2008 and went up to as high as P28 in May 2011 or 1400% increase in 2.5 years. JGS was at a previous high of around P15 before it went down to P2.

DMC and JGS are just some of the stocks that have worked wonders when the market recovered. What does this say? Blue chips are bound to get cheap with the upcoming recession (if Europe can't solve the Greece puzzle). Some stocks that are have great potential are EDC, MEG, mining sector stocks such as PX, NI, ORE, AGP, DIZ, LC, and MA, the financial sector stocks, and probably SMC, and CEB.

However, while waiting for the storm to calm down, penny stocks are getting some attention. 2011 was filled with mixed emotions in the market but these penny stocks has just been plain spectacular

BHI - From around 0.065 in January 2011 to as high as 0.51 mid September, BHI has already went up to as high as 685% in just 9 months before it went down after the news broke out that it is going to be suspended for 3 months. At around 0.2, BHI is somewhat cheap and it will go back up in just a matter of time.

MA - From 0.022 in January to as high as 0.077 at late August, MA has gone up to as high as 250% in just a matter of 9 months. Thanks to the strong mining sector that has pushed this one up along with LC. MA/B has basically the same growth as MA.

LC - A leap from 0.4 to 1.8, LC has gone up by 350% in just a matter of roughly 9 months. A strong gold plus the Goldfields deal pushed LC up along with LC/B and pulled MA and MA/B along with it.

ZHI - Kinda late as it started its run just on July but it went up by more or less 500% in just a matter of weeks. After the retracement, ZHI has started to show some life once again by going up from 0.6 to nearly 1, roughly 66% in two or three weeks.

What are the key points here?

1.) With a very uncertain market, traders/investors are banking on "cheap" stocks such as penny stocks. Putting aside P/E ratios, debt-to-equity ratios, and other fundamental indicators, by cheap we mean a huge upside potential. Penny stocks can give a large number of shares which in return, may result to bigger earnings (or losses) per tick. Penny stocks come to life when the market is bad and while waiting for the market to recover and the blue chips to come back to life, rest on penny stocks. One stock that may follow suit is WPI.

2.) As soon as the market recovers, shift to blue chip companies. Blues move faster in a very good economy because they are the barometers of the economy. Though penny stocks may still continue to do good, blue chips move faster. Just refer to DMC and JGS's performance after 2008.