6-month checkup: TEL

TEL shares are a keeper in any portfolio. I made sure that this was the first stock I have to buy. Especially during last year’s recession, TEL is one of three stocks that stood to lose only a small portion of its value. SM and SMC are the other two. The current surge in price is due to a lot of factors:

  1. Acquisition of a controlling stake at Philippine’s largest electricity distributor
  2. Better than expected earnings and dividends
  3. Foreigners eyeing bargain prices have bought large shares of the stock
  4. TEL is enjoying a surge of subscribers as competitors’ churn rate increases

The current PE ratio stands at 13. When I bought the stock last April it was around 10 to 11. It has bought me so far a 19% gain since I bought it. This was a modest gain and I do not expect it to go up above 20% in the next 6 months. The only reason people are holding stake at this company is that it enjoys a dividend yield of 7-9% on a yearly basis with minor fluctuation in price. Fund managers choose to have a sizable amount of their portfolio to TEL because of this. TEL’s dividend is projected to increase by 10% this year. Currently, my portfolio has an allocation of 10% on it but my target is only 5% on Project Alpha’s endpoint.

I still have a bullish take on this stock but my suggestion is still hold. I would suggest that you buy the stock once there is a major dip in price. A lot of the movement this week is due to traders cashing in on profits due to the previous week’s sudden hoarding.

What’s new in PLDT? Nothing. This is already a mature company with very little to grow. That’s why it’s acquiring other companies and seeking out ventures. Improvements are largely tech dependent so if there’s nothing new in tech, there’s nothing new in PLDT.


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