How to choose what stocks to buy & sell in Philippine Stock Market

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Choosing what stocks to buy and sell in Philippine Stock Market is the real game when it comes to investing.

In this post, I’ll be giving you some practical guidance to completing this step.

It’s actually easy to buy and sell stocks in Philippine stock market (the manual part of it is contained in this tutorial >> How to Buy and Sell Stocks in Philippine Stock Market), but whether the action will give you profits is another more important question.

In fact, this is one common question coming from any newbie investor: What stock can I buy now?

The answer of course depends on several factors, but each one of them practically boils down to your target destination.

What is your target destination?

Your target destination can be one of these two: (1) Target Date         (2) Target Price.

To give you an example, let’s say your Target Date of realizing your stock market gains is on your retirement time – which, for example, may come at least twenty years from now.

In that case, choosing giant companies which you think will outlive all of us can be your candidate stocks to buy using the strategy of Peso Cost Averaging (Check here how this strategy works). The goal here is not really to do timing of the market but using your long time-projection to accumulate as many shared of great companies as possible.

So by just knowing your Target Date, you can start streamlining your stocks selection and strategy.

Having different Target Date as destination obviously requires different stocks and strategy. As shared in my last blog, the growth of your investments is a factor of Time, Talent & Treasure you allow your investments to have.

  • TIME refers to how long you’re willing to park your money in the stock market.
  • TALENT refers to your skill in choosing your strategy and stock selection. This  can be monitored as percentage growth your investment money achieved.
  • TREASURE refers to the amount you’re investing. Since growth of stocks is reported on a percentage basis, a bigger base or capital will obviously translate to bigger actual net profit.

In the table below, the same ending target (ending value of 7245) was obtained with different variations in these three factors.

Time Talent & Treasure in Investing in Philippine stock market

With the target date in mind, you can plan how to achieve your goals by looking for the proper combination of your 3T’s – Time, Talent & Treasure.

Now we go to the second type of your target destination – Target Stock Prices.

If you’re investing believing that it’s actually a business, you’d want to invest in a company you believe is going to rise in value fueled by its continuous growth and earnings. This price which you believe a company will achieve some time in the future is called its Fair Value (FV).

More specifically, Fair Value is a company’s estimated worth or fair market value as computed by various ways specific to its industry (i.e DCF, NAV, P/BV, P/E).

This FV kind of target price is different from short-term target prices set by traders who buy stocks to simply ride short-term price fluctuations.

Now, calculating Fair Value is already one complicated animal especially for beginners.

Fortunately, some online brokers provide their own analysis and figures for Target Prices. In addition, some online brokers like COL Financial even give sample portfolio you may want to imitate.

At this point, let’s tackle how online stockbroker COL Financial can help in determining the Fair Value of candidate stocks to buy (If you don’t have an account yet, you can follow this tutorial to open >> How to Open an Account in COL Financial for newbies and OFWs).

This is as simple as logging-in in the website and going to its Investment Guide by following the menu: Research >> Fundamentals >> Investment Guide.

Investment Guide of COL Financial

Here you’ll automatically see the Fair Values calculated by COL Financial’s analysts which you can use as your target price.

Fair Values of Companies by COL Financial

There’s also another helpful data included in the table above called Buy-Below Price (BBP) which you can also follow to give you decent returns when you decide to sell with the FV prices.

The concept of Buy Below Price is very simple –  you only buy when the stock’s current price is below this BBP.

As you will notice, these Buy Below Prices are actually near 85% of the FV, which means that by observing the BBP in your transactions (meaning, you buy only when the stock’s current price is below this BBP) you’re effectively strategizing to have at least 15% expected growth should you decide to sell later on at those FVs.

Fair Values of Companies by COL Financial 2

It’s important to note that computed Fair Values may vary from broker to broker because of the differences in the way they calculate it and the assumptions they make in doing so. Understanding how the FV’s you see were computed is thus important before relying on it. Don’t just follow blindly. Compare using several researches if you can.

The discussion above gives you Target Price you can use. But more than that, COL Financial also has model portfolio you can use in screening your stock selection.

COL Financial Model Portfolio

The model portfolio consists of stocks that COL Financial recommends in its monthly strategy report, COLing the Shots. It consists of the stocks they believe to have favourable fundamentals, and are expected to be the major beneficiaries of the prevailing macroeconomic trends.

In short, it’s a “model” portfolio that COL Financial maintains. COL Financial adds/removes stocks to/from the list depending on their performance and market changes. It’s a porftolio you could literally monitor or copy. You can check this post for updates on COL Model Portfolio.

You can access this info still from the investment guide and choosing the Model Portfolio Set-up.

COL Financial Model Portfolio

Here you can see the selected stocks in its Model Portfolio together with their Fair Values and suggested BBP.

COL Financial Model Portfolio 2

So, if you’re looking for some free guidance what stocks to buy and when, this is a good start. Again, make sure you understand how the figures were calculated before using it in your strategy.

UPDATE: This Model Portfolio is no longer accessible in COL Financial’s website. However, you can see still use as a guide their list of stock picks  in their COLing the Shots reports. An example is shown below. Or you can use SAM by Truly Rich Club which can give you the exact stocks to buy and sell.

COL Financial COLing the shots stock picks

The COLing the Shots reports are available inside the COL website under Research section.

It is “a monthly publication by COL which provides insights on investment
opportunities based on global and local developments that could affect the market. COLing the Shots aims to provide timely and relevant information and analysis as well as a model portfolio for successful investing.”

COLing the shots

 

Paid Resources

Of course there are online resources you can avail to help you in this task.

Pinoy Investor for example gives you an already consolidated data coming from comprehensive researches of eight online brokers.

By having access to several FV’s computed by several online brokers, you can easily make comparison of their estimates and formulate consensus data. You’re also able to validate in case one broker may have bias to one stock.  Lastly, you can also see how many brokers give buy/sell/hold recommendation to a certain stock.

Piny-Investor-Nesletter Updates and Review

Once you’re decided with the Target Price you’re going to use, you can then slice at least 15% from it and just use it as your BBP.

You can check in this post a short review how Pinoy Investor can be a big help both for long-term and short-term investors. In fact, in its latest performance update, it tells of its 10 out of 13 stocks with BUY recommendation from one broker that outperformed PSEi. You can read more about it here.

Truly Rich Club’s Stocks Update is another one that can deliver all these information straight to your email on a regular basis. But as you’ll read in this Truly Rich Club Review, the club is much more than stocks update.

For example, one benefits of the membership called Stocks Alert recently sent just advised the selling of TEL shares after achieving more than 20% growth. This does not include yet the generous dividends TEL has paid out to its owners. You can check the table below and read this post to see how Truly Rich Club of investing works >> Strategic Investing with Truly Rich Club.Truly Rich Club Review Performance 2


As a last note, it is also advisable to just check your investments once in a while to see how it performs. Maybe once a month will do if you’re not the trader type.

Also, before investing you should see your overall finances in a bigger picture and understand that you have to start with protecting yourself and dependents before plunging directly to investing.

I suggest you start studying BTID (Buy term, invest difference) if you have the time to actively manage your investments. Get a term insurance before starting investing. In my case, I can get mine with only less than 3k annual premium for 1M coverage with Philam with my IMG membership. (You can check what IMG is all about here).

Hope this helps in drafting your own investment plan.

If you have other questions, let me know in the comments below.

Have fun investing,

oMeng 😉


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good day Mr. Omeng, newly joined na ako sa COLFin at plan ko longgg.. investment 5yrs above at ang budget ko 20k every month @ 7 company stock worth P2,500 to 3k/Stocks maximum then sa ssunod na month the same amount 20k pero another 7company stocks ulit? After 3rd month bbalik ulit ko sa 1st batch..almost same like peso cost averaging..applicable ba to? ggamiting ko pba iyung BBP Buy Below Price or just buy every month without any worry price either uptrend or downtrend? pls answer thanks Nard KSA

  • Eduardo Marzan Jr.

    Dear Omeng,
    I am reading your blog and learned a lot. I plan to invest in stocks now but I am thinking if it is still okey since I am already 64 years old and retiring by next year from government service. I have invested in mutual funds five years ago since it is less risky than stocks. My time period is about five years if I will invest in stocks now. Pwede pa ba mag invest in stocks?

    EGM

  • Dhong

    Hi sir omeng.I’m living outside the country ,is there a possibility for me to join in phil.stock market ? I don’t have any philiipines bank account but willing to try the stock market.

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  • Dominique Villamor

    Hi sir OMeng..
    mahalaga bah maging updated sa mga news sa company like for example PUREGOLD, FLI, BDO and ETC.. before you buy a stock???

    1. Omeng TawidOmeng Tawid Post author

      @Dominique, yes of course, it’s important to be aware of what’s happening in the company you’re investing in from time to time..

  • Harris

    hi..
    do you have a trade simulation? i wanna practice trading before going to the true deal.. do u wave any site? thanks ..gudluck

  • Mckein

    Hi!
    I am new to stocks. I didnt even started investing yet. as of this moment I am still studying on how to start and what will happen in the future. Stocks depend on the market, depend on the performance of the company, as what I knew. There is a possibility to gain or loss. My question is, is there a tendency that all your investment will be totally loss or just only like a trust fund that you will be having a paper loss only?

    Thanks.

  • Alex Grume

    Good Day! I'm a student, Third year college. were having our project which is a realistic investment proposal,and regarding on our research, can I ask some questions? 😀
    On what companies should i invest in a
    Short-term,
    Mid-term and
    Long-term investments? and how would I get or compute its Expected Return?

    Thank You for having time of reading it…Please help us.:D

  • milanie

    Hi Sir Omeng! i just need your expert advise. I want to buy my own brand new family car within two years and I want to invest my downpayment into stocks to get higher interest than saving it in a bank..the interest I could get can be an additional to my dp. Is this possible.the strategy i want to use is sam..but diy only as I dont have a 500 monthly to subscribe to trc of bo.

    1. Omeng TawidOmeng Tawid Post author

      @Milanie, that’s a risky move. You cannot be sure whether you will earn in stock investing if your time span is only few years. It’s possible but the risk of losing is also there. I suggest you don’t do that baka di mo mabili ang family car. Allot a separate fund for your investments.

  • abi

    Thank you for continuously posting and teaching on how to invest in the tock market! Keep it up! Your blog is one of the best and easiest way to understand!

  • John

    Great post Omeng!

    I agree that the basic question would be what to buy, and a lot of investors answer that in different ways. Based on numerous value investing books, such as The Intelligent Investor, the cost averaging method is one of the most effective ways to invest in stocks. Especially for people who don’t have a deeper background in stock analysis.

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