By: Marvin Germo | March 10, 2017
#AskMarvin What should I do with my AC stock?
“As a stock expert in the Philippines, may I ask for a holistic view on Ayala Corporation? I have been holding the stock for more than 5 years now. The stock has gone up significantly for me that’s I am not sure if I should hold on to it or sell it. My friends are telling me to sell and just transfer to another stock. I have been investing for quite sometime already but I have not yet developed a strategy to exit the stock. Should I hold or sell?
Anna V, Iloilo City
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Marvin Says:
First of all thank you for your question. I’m happy that you have already started investing for quite some time. When majority of the people were not yet investing, you already were! For that, congratulations! As you have been investing for quite some time, I’m pretty sure that your stock has already appreciated by so much, especially if you have it already for more than 5 years! Plus, you have been receiving extra cash from the dividends that they release each year!
However, before I give you some of the reasons why I like Ayala Corporation, here are some things to ponder about:
- Since you held on to it already for a long period of time, what about it has changed that made you want to sell it?
- The best place to be is to buy and sell stocks based on your analysis and not because of pressure.
- If you have been holding Ayala Corp for so long you must have a great conviction about the company. That conviction, I believe, is already innate in you; what I will share here will just further enhance it.
Here are my top 10 reasons why I like to invest in Ayala Corp for the long term
A Company ofPrestige
Ask anyone in the country if they know what Ayala is and for sure you will get an answer. A prestigious company always forms a demand and is less battered in bear markets when compared to unknown companies.
Professionally Managed
Ayala is managed by one of the best executives and managers in the country! In fact, Ayala Company again bagged the award for Asia’s Best Managed Company in Asia!
Diversification and Exposure
Ayala is exposed to almost every industry and service in the country. From property development, telecoms, banking, water distribution and concession, car dealership, call centers, energy, hospitals, online shopping, and construction! What more can you ask for? Wherever you may be in the country, for sure you have come across any of its subsidiaries.
Valuations
Its stock is still undervalued, by computing it’s growth rate and using that rate to compute the value of the company. I believe fundamentally the stock is worth 920 Pesos a year from now and around 1,142 Pesos for a two year timeframe. From its price right now the stock still looks very attractive.
Technicals
Ayala is still in an uptrend. Technical analysis confirms that there is still a good long-term demand on the stock, and it continues to be in an upward direction for the long term.
Fundamentals
It has a very strong balance sheet. Ayala Corp boasts of a very strong, liquid, and dynamic balance sheet, with tons of cash to maximize more growth opportunities in the future!
Longevity
It is solid as a rock. I can see Ayala Corporation still standing 25 years from now and for even more than that! I like what Warren Buffet said, “buy a company you can confidently hold on to even if the stock market would close the next day.” Also, I like what he said that if you are investor—“the longest time to hold is forever.”
Growth and Protection
The companies under Ayala Corp are either growing with the economy like BPI Ayala Land, and their power and construction companies or either they are very defensive like Globe and Manila Water. What’s great about it is that you are covered in a booming economy and also if the economy would turn sour!
Premium Stock
Like Apple or the iPhone, people already know that Ayala Corp is an expensive company P/E wise. But regardless of how expensive it is, at the end of the day general market would still catch it and buy it. My suggestion though, is to buy at the lower end of the P/E range. Don’t buy a stock while it is utterly expensive, buy it when it becomes relatively cheaper.
Life won’t be the same
Can you imagine a life without an Ayala Mall or development? Can you imagine life if the water distribution in Manila is still handled by MWSS? Can you imagine life with just a monopoly in cell phone carriers? What am I saying here is that Ayala has been part of every Filipino’s life! When I think about the company in that perspective, it that gives me a larger conviction that Ayala stocks is worth holding on to for the long term. Also, it is unimaginable to see a Philippines without an Ayala company at the forefront!
Again, these are the 10 things that can help you further your conviction that Ayala Corp is a good company and worth holding on to for the long term. As you already know, I am more of a trader and I buy in and out of a stock. However, if you would want know to if Ayala stocks are worth buying and holding on to, my answer is a screaming—YES!!
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