A Stock Value Investor

A stock value investor is a person whose investment strategy is to buy and accumulate shares of a specific company publicly traded in the stock market, which market price falls below its book value. This type of investor is convinced that the current undervaluation of the stock provides him an opportunity to own that stock for a longer period, say, five (5) to ten (10) years. The two most popular value investors are Warren Buffett and Benjamin Graham. 

Though I advise starters in stock market to adopt value investing, personally, I prefer trading on the basis of technical analysis and my personal interpretation of the psychology of the crowd that buy and sell the stock I selected. In doing so, I have my own parameters in my stock selection and they include the following:

·        Market price is below Php 5.00.

·        The value of that stock on the day I included it on my watch list must be above Php 10M.

·        The historical price shows a clear pattern of consolidation for more than 40 trading days.

·        Its technical chart must pass the test of Elliott Wave Theory. Meaning, its current price action must be identifiable on the basis of the movement of the waves.

·        There must be a drying up of volumes and price tightening after the previous huge volume and price swing. And closely related to this is the stock must pass Mark Minervini’s concept of Volatility Contraction Pattern (VCP).   

·        Finally, the current price also must pass the Fibonacci test. I prefer to buy between 61.8% to 78.6% retracement.

The above criteria describe my personal preference. Once I found a stock that passed such parameters, then I consider it a buy for me.

But for those who want to play it safe and do not have the luxury of time to watch the movement of the stock market, my personal suggestion is to do value investing. But again, even in value investing, I prefer a company, which market price per share is below Php 5.00. At this point, I will just share a list of stocks publicly traded in Philippine Stock Exchange that I considered undervalued on the basis of its Price to Earnings ratio [P/E (x)], Price to Book Value ratio [P/BV (x)], & dividend yield. By giving this list, I do not intend to be comprehensive. I will just include my stock preference in the list. Consider also that this recommendation is time-sensitive. The price of a particular stock few months from now could be radically different from its stock price today, 28 September 2019. Here is my proposed list of undervalued stocks for a stock value investor:

Company Name					Stock Code		P/E(x)	P/BV(x)	Dividend Yield
Bell Corporation					BELL		7.74	0.75	5.74%
City Land Development Corporation					CDC		6.14	0.58	5.23%
Del Monte Pacific Limited					DELM		196.66	2.14	4.57%
Filinvest Land, Inc.					FLI		6.62	0.55	3.88%
GMA Network, Inc.					GMA7		11.14	2.92	4.77%
Greenergy Holdings, Inc.					GREEN		1.44	1.25	N/A
Philippine Infradev Holdings, Inc.					IRC		0.67	1.01	Property
City & Land Developers, Inc.					LAND		6.81	0.49	5.56%
Pacific Online Systems Corporation					LOTO		8	1.4	100% stock
Lopez Holdings Corporation					LPZ		3.42	0.26	2.27%
Metro Retail Stores Group, Inc.					MRSGI		8.42	0.89	2.54%
Mabuhay Vinyl Corporation					MVC		5.9	1	1.97%
Nickel Asia Corporation					NIKL		18.4	1.88	1.72%
National Reinsurance Corporation of the Philippines					NRCP		13.57	0.38	N/A
PetroEnergy Resources Corporation					PERC		5.72	0.49	N/A
Philippine Estates Corporation					PHES		42	0.55	N/A
Premium Leisure Corporation					PLC		10.14	1.31	7.07%
Pryce Corporation					PPC		8.47	1.23	4.49%
Philex Mining Corporation					PX		31.5	0.77	N/A
Roxas and Company, Inc.					RCI		15.41	0.49	N/A
Philippine Realty and Holdings Corporation					RLT		4.68	0.5	N/A
Rockwell Land Corporation					ROCK		5.64	0.7	3.50%
Solid Group, Inc.					SGI		9.07	0.22	4.72%
Shang Properties, Inc.					SHNG		5.22	0.46	5.33%
Sta. Lucia Land, Inc.					SLI		21.41	1.51	N/A
SSI Group, Inc.					SSI		15.38	0.82	0.54%
SFA Semicon Philippines Corporation					SSP		9.09	0.37	N/A
STI Education System Holdings, Inc.					STI		23	0.8	2.89%
Harbor Star Shipping Services, Inc.					TUGS		14.54	0.87	N/A
Victoria Milling Company, Inc.					VMC		9.68	0.95	N/A
Waterfront Philippines Incorporated					WPI		69	0.31	N/A

NOTES:

1. Based on the above list, SHNG is the only one among 31 stocks that passed all three fundamental valuations. However, this does not mean that you should not invest in other dividend-paying stocks. It only means that the stock is really undervalued using all common valuations in fundamental analysis.

2. Conservative long-term investors consider a stock as speculative without dividends though both P/E(x) & P/BV(x) are low. And so they prefer to park their money for years in a dividend-paying stock. The good thing with a dividend-paying stock is that in case the price of the stock does not appreciate dramatically through the years, at least you have a fixed dividend that will serve as your passive income.