Philippine Stock Market Trading Advisory

Bargain Stocks’ Target Prices

(May 31, 2010)

Below are the target prices of the bargain stocks for this week.  We set our valuation boundary according to the average one-year yield of Philippine Peso Bond Funds.  This week, our blended multiplier limit is 23.6x.  We’ve also updated our PBVs with the first quarter results of our covered companies.  AC has slipped slightly off our list leaving 13 bargain stocks.  Below are their target prices if their blended multipliers have reached 23.6x.

It is favorable to build an investment portfolio using the bargain stocks.  An equal exposure in each of the stocks provides a potential 65.7% long term growth.  Aside from being undervalued, the nature of their businesses and their financial performances are sound enough to face economic turbulence.

To minimize risk, it is advisable to lessen exposure in FLI, FPH, FGEN and ATS and increase allocation in VLL, RCB, UBP and AGI.  This balances out the weaknesses of the four former stocks to strengthen the portfolio.

Pymwymi Fund Performance

The Pymwymi Fund is up 18.6% and the PSEi is up 8.2% from the start of 2010.

Note:  Philippine Stock Market Trading Advisory Disclaimer Below