EDC Flying High

Stock	Buy Below	Date Bought	Current Price	Target Price	Average Cost	Return + Dividends	Remarks
BLUE CHIP STOCKS
BDO	66.65	Sep 6, ‘12	64.00	80.00	60.10	6.50%	BUY
ALI	22.50		23.55	27.00	-	0	HOLD
PGOLD	29.16		29.95	35.00	-	0	HOLD
EDC	7.08	Sep 6, ‘12	6.67	8.50	5.94	12.33%	BUY
TEL	2,660		2,650	3,200	-	0	BUY
AGI	13.75		14.88	16.50	-	0	HOLD
MBT	95.80	Sep 14,’12	95.00	115.00	93.73	1.35%	BUY
SMALL CAP STOCKS
BHI	0.158		0.158	0.510	-	0	HOLD
MAC	2.80	Oct 23,2012	2.74	4.87	2.76	-0.66%	BUY

I just revised my buy below prices as well as some of my target prices to include the 2013 forecast. Micheal asked me on how I compute my below price. Well I understand that my main premise of the buy below price is not to chase a rising stock, no more no less. Now, I have just computed some of the buy below price I have seen around and have noticed that they are applying around 15% profit to the target price. For example, if AGI’s target price is P16.50, then the buy below price is P14.34. At P14.34, you will have a profit of P2.16 which is a 15% profit from the buy below price.

Sample Buy Below Price

Stock	Current Price	Target Price	Upside
AGI	14.88	16.50	15.00%

To be honest, I am not comfortable at this 15% margin buffer. So I increased my margin buffer to 20% of the target price. Still, at 20% margin buffer there are stocks like BDO, EDC, TEL and MBT that are still ‘buyable’. The rest are within the striking distance of being ‘buyable’.

Blue chips doesn’t take too much of an effort to forecast the target price. Just check most of the brokers’ analysts and you will find the target price. Although the target price varies from one analyst to another, the metrics used are almost the same.

Second liner (mid cap stocks) and third liner (small cap stocks/penny stocks) were sometimes ignored in the brokers’ analysts coverage. Thus, the work and effort must be concentrated here if you want to find a gem among these stocks. I have never seen coverage for MAC for example and it is through your own diligence and research that you can get a glimpse of what kind of stock MAC is. BHI is also one of those stock who has potential but is ignore by the analysts because PERHAPS it is too risky to touch and the volume doesn’t merit attention. This is where the retailers or the individuals can take advantage of the lack of volume. The institution cannot buy a low volume stock with its resources because doing so will trigger the stock to skyrocket like anything. A retailer on the other hand can buy in small lots. When institutions began buying the stock, the retailers are already positioned in the stock.

BLUE CHIPS STOCKS

BDO – issued P5-billion Long-Term Negotiable Certificates of Deposit (LTNCDs) carrying a maturity of seven (7) years and an interest of 5.25 % per annum. PSE

On the other hand, BDO will redeem the Series 1 Unsecured Subordinated Debt worth P10B. ^PSE

I think institutions are trying to maximize the current low interest environment we have. It’s been a while since we have these low interest rates in the market and BDO is capitalizing on it.

ALI – is increasing its investment in Ayala Center to P28.5B from the original P20B. ALI is redeveloping its ‘crown jewel’ Ayala Center and will account half of the P60B budget that ALI plans to invest in six Makati districts over five years. Key components of the redevelopment such as the new Glorietta, The Fairmont and Raffles hotel and offices catering to the business process outsourcing (BPO) sector are on track to open before the end of 2012. Garden Towers, however, will be launched within the year. Businessmirror

EDC – it is currently evaluating the prospect of Chile’s geothermal energy. The agreement with Canada based Alterra Power Corp does not have material effect on EDC’s existing operations and financial conditions since it is in the preliminary stage only. ^PSE

The President/COO is in acquisition mode of EDC shares which is a good indication that the management believes in the company’s potential going forward.

EDC has been in an upward trajectory lately. The volume it had for the past two days in green breached the 40M mark and that was a good indication of buying interest from the institutional investors. Highest price of EDC before was 7.06 which happened last July 8, 2011. The 6.67 price is the highest price EDC has for the past year and it has broken some of the resistance technically. RSI though is 77.21 already which is an overbought level.

TEL – Moody’s raises PLDT credit rating to Baa2. Well, it was upgraded because our sovereign rating was upgraded to Ba2. ^{Businessmirror}

TEL recently issued 150M Voting Preferred Stock to address the 40% foreign ownership issue. ^PSE These newly issued shares were issued to BTF Holdings, Inc. a wholly owned company of the Board of Trustees for the Account of the Beneficial Trust Fund Created Pursuant to the Benefit Plan of PLDT Co. ^PSE

AGI – Emperador, the world’s top selling brandy now wants to outsell Smirnoff as the second best selling spirit in the world by 2013. ^Rappler  

That is quite a determination from Emperador to unseat Smirnoff. I like the push though and the resolve of the company going forward. Hopefully it will achieve the goal. I think Emperador has to aggressively market its liquor outside Philippines in order to achieve the feat. “Sa totoong tagumpay” ng Emperador.

MBT – it approved in principle the sale of its 30% stake in Toyota Motor Philippines to GT Capital at P9B. This transaction will strengthen MBT’s balance sheet and capital position in anticipation of the stricter Basel III requirements. GT Capital owns Metrobank with a 25.1% stake with MBT. ^PSE

I believe that I shall see the bounty of the Lord in the land of the living. Psalm 27:13