How to Pick Stocks in the Philippine Stock Exchange

How to Pick Stocks in the Philippine Stock Exchange

How to Pick Stocks in the Philippine Stock Exchange

Investing allows you to grow your money at a faster rate than the interest in your savings accounts. Investing allows you to beat inflation, so even if the prices of goods and services continue to rise, your money continues to increase, too.

The interest in savings accounts is 0.25%. The inflation rate for the Philippines for 2015 was at 1.4%. The returns on your investments can range from single-digit numbers to double-digit percentages depending on where you invest in. Stocks offer the highest returns when it comes to paper assets.

Stocks, with the potential to profit a lot, also expose you to more risk. Remember the saying ‘high risk, high reward’ and stocks are no exception. Just as you can win big in stock investing, you can lose big as well. However, to avoid incurring losses in the stock market, it’s important to do your research first.

Below are three factors to consider when you pick stocks in the Philippine Stock Exchange. It’s important to note that these factors can be used by long-term investors (versus traders).

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Past Performance

While past performance cannot predict future performance, past performance is used to determine the longevity and direction of the company. How long has the company been in existence? How many years have gone by since the company became public?

Longevity shows that a company can withstand turbulences and high and lows in the market. During the 2008 recession, global markets were in a crisis, but there were still companies that performed well. In the same fashion, if you look at past performance and see a continuous downward movement (decrease in stock prices), this may be a sign that a stock will continue to perform the same way, downwards.

Look at the history of a company whose stock you will buy. A continuous upward movement shows promise, and a company that has been in existence for decades has stood the test of time and can withstand market highs and lows.

Questions to ask yourself:

  •         Has the company been in existence for decades?
  •         Does the stock price of the company continue to rise (or vice versa)?

Present Performance

How has the company performed in recent years? If you look at your trading portal, you can check the company profile, including the financials in recent years, of every company listed on the stock exchange.

Present performance allows you to decide the direction of the company in the future. Increasing earnings show that a company is fundamentally sound and has the capacity to continue to grow and operate.

The current management of the company determines the strategies and developments to be implemented in the coming years. Do the individuals of the management team have a track record in the industry? Do they know what they’re doing to grow the company?

Present performance allows you to see whether the future of a company is gloomy or bright.

Questions to ask yourself:

  •         Are the numbers promising? (increasing earnings, profits, dividends per share, etc.)
  •         Does the management of the company have the capacity and track record to grow the company?
  •         Is the company a market leader in the current environment?

Future Potential

If you keep up to date with the news, it’s common to hear announcements of companies planning future developments, be it a takeover of another company or infrastructure development around and outside Metro Manila.

News like this allows you to see where the company sees itself in the future. If the company has announced a layoff or a restructuring, then it can mean that the company is restricting its budget to move capital around and avoid incurring losses.

In the same fashion, if a company has plans to develop hectares of land, this is a sign of project expansion and shows a promising future.

Questions to ask yourself:

  •         Does the company have any plans and developments?
  •         Is the company depicted in the media positively or negatively?
  •         Can you see the company still existing a decade from now?

Study before you invest

Earnings from stocks are not guaranteed. You can lose a lot of your hard-earned money if you aren’t responsible and diligent enough to study and research beforehand. Before buying a company stock, research on the company itself and use the questions above to decide if buying the stock is a wise decision.

*This post was written by MoneyMax.ph, a financial comparison website with resources on personal finance.

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2 comments

  1. Hi Im new in this field Im trying to study it more. May I know just in case you need your fund outright how can I withdraw the amount I invested in stock market in the future ? I know selling my stock will be the answer but what if no one wants to buy at your price ? Is this mean that I have to sell it on a lower price to get my funds? Please help thank you.

    • Hi Jo,

      Yes, you may withdraw your funds anytime. The closer your selling price is to the current market price, the easier it will sell.

      Hope this helps!

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