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

Fibonacci Analysis: The Long Overdue Bull Run

Apparently, the much awaited uptrend is already long overdue. Bad news comes one after another which significantly affects PHISIX. Nevertheless, the index has shown signs of life as it remained in the consolidation stage despite the negative turn of events. Quite an achievement so to speak.

I ran a Fibonacci analysis on some stocks (including PHISIX) and found some interesting set ups. The chart below shows that PHISIX is just hovering above 23.6% of Fibonacci which is at 3800. This is applicable to those who are investing in mutual funds and UITFs since these financial entities are strongly affected by the stock market. As soon as PHISIX hits 3800 and bounces back up, it's a good entry point.

The charts below show some good stocks positions for several companies.

PCOR: Many are scared of PCOR because of the dip that it took for the last two months. The chart below shows that PCOR went up as it hit the 50% mark. 50% in Fib is quite strong (in my opinion). It is a little premature to take PCOR but this is definitely worth the look.

JGS: JGS hit the 23.6% mark at 21.5 and went back up. Confirmation is needed as usual to minimize the risk. The chart also shows that 21.5 is a resistance that might turn into a support if JGS would bounce back up. Other than Fibonacci, JGS is also resting on its uptrend support.

JFC: JFC is nearing to hit the 23.6% resistance at 85. If JFC will break it, it will indicate some strong bullish momentum. On a short term perspective, JFC is consolidating. It's undecided as to where to go so again, waiting for a confirmation would be wise before coming up with a decision.

EDC: EDC hit 23.6% at P6. Considering that this has some bullish momentum, this would most likely bounce back up. EDC got some good reviews for the year so I think that at P6, it is a good buy.

AC: Just like JFC, AC is up to challenge the 23.6% resistance at 360. AC was hovering around the 355-360 mark recently and should it get past 360, it will signal some strong buying.

Fibonacci Retracements only suggest where the price would possibly go next but doesn't exactly tell where it would head. It still needs confirmation of price action, other indicators, and fundamentals to further boost its reliability. Nevertheless, I remain optimistic on these stocks for 2011 and the bulls are just waiting at the corner.

The Rainbow After The Rain

After some selling pressure for more than a month, the Philippine Stock Exchange Index (PHISIX or PSEi) is now into the consolidation stage giving signs of a possible uptrend real soon. Some stocks have already broke loose from their short term (in the 1 month downtrend) resistance, some going into consolidation as well while some turned such resistance into supports. However, there are some that continued to go down.

Since the valuations went down for the past weeks, this is a very good time to buy as the much anticipated uptrend is just around the corner. PHISIX is flirting with it's 3900 resistance and as soon as it gains some serious bullish momentum and break such resistance, expect a good number of stocks and PHISIX as well to soar high.

The list entails a lot of Fibonacci retracements and Elliott Wave Theory wave 5 potentials. Elliott Wave Theory's wave 5 is an uptrend or in other words, the value of a particular stock continuing to go up. Fibonacci on the other hand notes some precalculated support/resistance levels that are found to hold true (not all the time but most of the time). If a price hits a Fibonacci support/resistance, it is most likely to reverse.

I have kept a handful of companies in my watch list and picked a few with some really good potential to invest in for at least this year. Most of the MACDs and RSI of such companies are positive indicating some good points of entry. Here's my list:

AC - For the past weeks, AC dropped from around 403 to just a little over 320. For the month of March, AC gained buying pressure as it rose to almost 355. In a two-year reference, AC is hovering above it's two year support and might possibly head into wave 5 of Elliott Wave Theory. My favorite part is seeing it bounce at 38.2% of Fibonacci since January of 2009.

AP - From mid-October of 2008 until this day, AP is on a very strong uptrend gradually yet consistently rising from barely a peso to as high as 35. However, a certain support (from around September of 2009) says that AP's support has turned into a resistance which it is currently challenging right now. Fibonacci suggests that AP might have bounced at 23.6% already (which is a minor support in Fibonacci). As of now, there is no clear indication as to where AP would head next but as soon as it breaks through its resistance at around 32, it's going to be a good buy.

DMC - Technicals are really looking so good for DMC. First, it is resting on a very solid uptrend support and just bounced recently at around 33-34. Second, in a two year span, DMC's position for an Elliott Wave Theory wave 5 is looking really good. For the entry, DMC just broke it's resistance at around 37. It is going to be on its way to challenge its previous high at 40. I'm very optimistic about this one.

JGS - JGS broke its uptrend support and went sideways for the past 2 1/2 months. However, JGS is forming an ascending triangle and should the resistance at around 19.8 will be broken, JGS could go high fast. In a 1 1/2 years span, JGS could enter Elliott Wave Theory wave 5. It needs some confirmation though as MACD is showing selling might just be ahead. JGS has already hit its 38.2% Fibonacci support in a two year reference.

MBT - Another Elliott Wave Theory wave 5 candidate. However, MBT's support for the last 2 years has become its resistance. If it could break its resistance at 72, it will be on its way up, wave 5 might come after all. It is also resting on its 38.2% Fibonacci support. A bounce is more likely.

MEG - From April 2009, MEG is an eye candy for Fibonacci players. MEG is well resting on its 38.2% support, consolidated, and resumed an uptrend. MEG also just bounced from its 2 year uptrend support, quite a solid support that is.

RCB - In nearly two years, RCB just bounced from its 23.6% Fibonacci support. However, on the same span of time, it has just gone below its uptrend support and challenges to break through it. Should RCB break such resistance and turn it back into a support, it will be on its way up.

SCC - Not really much to say about this one. It's uptrend support is very strong. One of my best picks for the year.

SMC - After a strong uptrend, SMC is consolidating as of the moment. Considering all the fundamentals that this company has, SMC remains a strong one for 2011. Confirmation is needed for entry. From the foot of its uptrend late in 2010, SMC is on the 23.6% support of Fibonacci at roughly P160.

SMPH - As of this writing, SMPH just broke out from its downtrend from December of 2010. A support at 10 is somewhat found but as far as Fibonacci is concerned, it might fall down as it hits the 23.6% ceiling. However, in a two year span, SMPH might head into Elliott Wave Theory wave 5. Quite worth looking at.

However, these are all just based on my analysis of the charts and doesn't include fundamentals yet. Always keep in mind that the most important thing in all of these is the price action. Technicals are just signs of the possible behavior and to project the possibility of the direction of the price. If things won't go as expected, bail out. Your decisions will never be right all the time. And lastly, cut hoping (that the price will go up anytime soon). Hoping can lead to false hopes.

SCC: Going Down?

For a little more than a year, SCC's uptrend support has been so strong. SCC's stock rose from around P40 in January of 2010 to as high as P210 (even higher) in January of 2011. The support was challenged several times yet held firm.

However the chart below signifies that SCC's uptrend support might finally give in. First, the chart shows a rising wedge formation which theoretically signals that a downtrend is coming soon. Second, SCC has breached its seemingly strong uptrend support (encircled in blue).

Though SCC is a strong one, the chart shows the market sentiment. It's price action is starting to consolidate after a gradual yet consistent rise. This could be testing a new support level or heading for a reversal (hopefully, it's the former).

On a personal note, I think that SCC is going to be one of the strong stocks as soon as PHISIX is done with consolidation and resumes an uptrend. The Mining and Oil index is projected to do very good in 2011 and SCC is the leading company in the said index.

SCC's charts shows two things: [1] That it is a very strong stock considering its uptrend support (which was breached possibly because of consolidation of the market), and [2] That it might finally break the support and go for a nosedive. How deep? Nobody knows. SCC could go as low as P160, P140, or P110 based on Fibonacci's 38.2%, 50%, and 61.8%.

A bold prediction on SCC: As soon as this gets through the previous uptrend support which is at around the P210-P215 range, it will gain momentum and rise fast. Right now, I think that it would just be wise to buy on rallies and sell on dips (or sell on resistance).

Megawide: Developing Properties, Developing Potential

Megawide Construction Corp. is the first company to go public this 2011. Just in case you're not familiar with what this company is, Megawide is one of the biggest and fastest growing engineering and construction firms in the Philippines today. Megawide accounts for 70% of the residential condominium projects of the Sy family's SMDC. Other than SM's projects, Megawide's clients include Belle Corporation, Antel Group, Suyen Corp. (owner of Bench), Prince Jun Development Group, Bellevue Hotel Group, Keppelland Realty, Malate Bayview Development Group, and Goldland Properties and Dynamic Realty.

In it's move to go public, Megawide opened 34% of its company's total stock to the public. In it's opening day, Megawide (listed as MWIDE in PSE) offered P7.84 per share.

Being it's top client, Henry Sy's SM bought 64% of MWIDE's total shares leaving only 36% left for public consumption. SM is having several construction plans for 2011 all over the Philippines which means more projects for Megawide. Never mind Sy and SM owning part of Megawide to cut costs in their projects, Megawide is going to have a very busy year and that's all that matters.

Rumors also has it that SMC plans to buy into MWIDE. SMC's diversification plans fits well with MWIDE as SMC is planning to get into PPP (public private partnerships) this year. Should SMC get into MWIDE sooner or later, that would further boost MWIDE up. SMDC and SMC are strong enough to lift MWIDE up. Aside from SMC, Phinma and Ben Chan of Bench are also rumored to take part of MWIDE.

Lastly, there are 11 PPP reported to start this year for a rough total of $200 billion. Being one of the biggest construction and engineering firms, expect Megawide to get into the negotiation and contract talks in at least one of these 11 projects.

Megawide was established in 1997 by De La Salle University civil engineers Michael Cosiquien and Edgar Saavedra and became a P2 billion company since then and accounts for 20% of high rise residential property construction business. Turnover is expected to double to P4 billion this year.

My personal note is that I think that MWIDE is still undervalued considering that SM bought more than half of it's shares. If SMC would push through in acquiring shares and with their PPP plans, MWIDE could be worth a lot more than its IPO price.

SMC: Fundamentally Sound in 2011

San Miguel Corporation (listed SMC) is one of the companies poised to have a breakout in 2011. SMC broke loose from around P80 in November of 2010 and reached highs at around P185 entering January 2011. The sudden rise was triggered by the reports that SMC is going to invest $40 million in Indophil Resources NL, owner of 37.5% stake in the untapped gold and copper deposit in Asia and part of the $52 billion Tampakan copper-gold project in South Cotabato and the recent acquisition of petroleum heavyweight Petron.

However, SMC has somewhat found a resistance at around P180 as shown in the chart below. For a company that has a lot of fundamentals, what could possibly be holding SMC back from breaking out? SMC's sharp rise might have prompted several firms and individuals to take their profits. The sell out has brought PHISIX down and several investors have taken their money to more stable economies such as the United States and Europe, invested them in stronger currencies or indices.

As far as SMC is concerned, their diversifying plans have further boosted the value of their stocks. Other than the Tampakan project, SMC may also challenge the Pangilinan-led Metro Pacific Investment Corp.'s offer to buy the government's stake in Metro Rail Transit (MRT 3) confirmed by SMC president Ramon S. Ang. SMC is also in talks with Citra Lamtoro Gong Persada and Star Tollway Corp. for a possible organization and establishment of a corporation that will consolidate and undertake toll-road operations and participate in infrastructure projects initiated by the government through it's PPP (public private partnerships) program.

In terms of revenues, SMC eyes a revenue of P1 trillion by 2016. The company made P230 billion in 2010 and projects P530 billion in revenues in 2011. Out of the projected P530 billion revenue, only P214 billion are said to come from the company's traditional food and beverage businesses while the remaining sum from the new businesses, spearheaded by Petron.

Mr. Ang also announced that SMC will have its second public offering once the price of its shares goes up to P250. Ang also said that SMC's current price which is around the P175-P185 range doesn't reflect the company's real assets and worth.

As soon as the market would pick up some buying momentum and break its resistance at P180, expect SMC to go high, fast, and steep. Personally, I think that SMC could go higher than P250 even as high as P300 before 2011 ends provided that its diversification plans would come into fruition.

JFC: The Bee is Buzzing

After reaching the P100 plateau by late October of 2010, JFC (Jollibee) has somewhat gone sour and went down. From November 1, 2010 until early February of 2011, JFC went down from P90 to as low as P70, about 23% decrease in value.

JFC isn't getting much attention lately but I think that JFC has great potential than it's price action dictates. The chart below shows that JFC is potentially starting an upward momentum. The price picked up since it reached P70 and in nearly a week, it is hovering around the P75 mark. MACD and RSI are also positive. JFC's MACD signifies that an uptrend is somewhere ahead and it's RSI shows that it is strengthening both marking that it will go up sooner or later.

The graph below shows that JFC is approaching the 38.2% mark of Fibonacci. Theoretically, prices changes direction when it hits the 38.2%, 50%, and 61.8% marks of Fibonacci. 23.8% and 76.4% are areas worth looking at but not as strong as those 3.

JFC's behavior follows Fibonacci religiously. It went down when it hit the 61.8% mark in 2006 before bouncing back up when it hit the 76.4% mark later in 2006. It went down again after hitting the 50% mark in 2007 before bouncing back up after hitting the 76.4% once again in mid-2008. 38.2% could be a potential support if JFc would continue to follow Fibonacci.

JFC found a long term support at P30 but after surging past it's resistance at around P55, it might turn such resistance into support.

If worse comes to worse and JFC won't bounce back at 38.2%, it could go further down to P55 which is it's next support (shown on the chart below).

Fundamentally, JFC hasn't been a talk of the town lately. However, as soon as their Ti Amo coffee shops will start to materialize, expect JFC to take some serious momentum going up. The acquisition of Mang Inasal spurred the bee up in 2010, Ti Amo might do the same as well.

JFC still lacks market sentiment as of the moment but as soon as the fundamentals will start to come in, it will further strengthen it's technicals and there's no reason for it not to go up.

JFC went up from a little less than P10 in 2001 to as high as P100 in near end of 2010, some 900% growth in nearly a decade. From mid-2008, it went up from about P32 to a high of P100, more than 200% growth in just a year and a half.

It think that JFC still has a lot of room to grow given it's current price. P110-P120 range is doable before 2011 ends as long as fundamentals and market sentiment could back it up.

2011: Go high with JGS

If you're shopping for stocks to go long for 2011, JG Summit (JGS) is definitely one of the best picks. Just in case you don't know, JG Summit is the umbrella corporation of Cebu Pacific, Universal Robina Corporation, Robinsons Land Corporation, Digitel Philippines, United Industrial Corporation, Robinsons Bank, and JG Summit Petrochemical Corp run and owned by the Gokongwei family. JGS is one of the leaders in agro-industrial and commodity food products, telecommunications, property development and hotel management, air transportation, petrochemicals, information capital and financial services, and other supplementary businesses.

Probably you've heard me fantasize about JGS for a number of times already but who won't for a company that gave a growth of roughly 2000% in less than 2 years? In fact, it went up for as high as 2500% by near end of 2010 before starting to go down slow. If you had placed P100,000 in JGS back in March of 2009, you'd be having P200 million by now!

Anyway, speaking of JGS's potential, the chart below shows that [1] JGS is resting on it's uptrend support (which is very well inclined by the way), [2] it is bound for wave 5 according to Elliott Wave Theory, and [3] MACD (encircled below) signifies buying spree is just around the corner.

Take away the complexities of the analysis and summing it up, JGS is bound for another uphill climb and based on it's performance over the past 2 years, we're talking about some serious growth. Another 2000% gain might sound too ambitious but 500-1000% or maybe lesser won't hurt either. If that won't excite you, I don't know what will.

The chart below is JGS's chart from November of 2010 until February of 2011. The first line (longer line) shows that JGS was resting on it's downtrend support from November of 2010 until around mid-January of 2011. The second line (shorter line) shows that JGS didn't return to it's support and started to go back up. JGS is starting to gain momentum and it won't be long until it will start to rise again.

According to experts and professionals, PHISIX will get back up soon and by that time, expect JGS to continue it's uptrend too.

JGS is at P19.60 right now, quite a bargain if you ask me. We still haven't heard anything from JGS yet but as soon as fundamentals could back the technicals up, it will further solidify JGS's rise.