Philippine stocks will extend Asia’s best performance this quarter, driving gains for food-maker Universal Robina Corp. and homebuilder Vista Land & Lifescapes Inc., the nation’s second-best performing fund said.
“In this kind of market nine out of 10 stocks will rise, so what you have to look for are the outperformers,” said Eduardo Banaag, who helps manage $573 million at First Metro Investments Corp. His Save & Learn Equity Fund has returned 221 percent over five years, second-most among 22 Philippine equity funds domiciled in the country, according to data compiled by Bloomberg.
Universal Robina, the nation’s largest maker of snackfoods, and Vista Land, the country’s fourth-biggest homebuilder by sales, will “outperform” the market and their peers as they are “relatively cheap,” Banaag said. Investors should also buy shares of DMCI Holdings Inc., the nation’s biggest construction company, and Aboitiz Power Corp., he said.
The Philippine Stock Exchange Index has climbed 22 percent this quarter, the best performer among the 15 biggest Asia Pacific markets, as the fastest economic growth in three years and higher-than-estimated earnings boosted stock trading. The measure rose to a record 4,123.95 yesterday, extending this year’s gain to 35 percent.
The measure will rise a further 10 percent this year from yesterday’s close, as earnings grow by 25 percent, driving valuations closer to 16 times estimated earnings, Banaag said. Companies in the benchmark index were yesterday valued at 15.4 times estimated earnings, the highest since January 2008.
“Earnings growth is not on a slippery slope: it has traction thanks to resilient remittances from Filipinos overseas plus a domestic-driven economy,” Banaag said. “Corporate profits will end 2010 at record levels.”