Dear readers, so sorry for not having been able to post anything for quite some time. I've been stumped at work and just couldn't find time to update my blog. The title of this entry, "At last.." is a sigh of relief that now I'm able to update this blog again.
At last also refers to a recent mining stock that flew, unlike other basura mining stocks which overpromise and underdeliver. Since I love pun, I suppose "At last" was a good word play for Atlas Mining, which in the previous two weeks broke out from its consolidation phase in the 9.6 range to reach a high of 12.20, if I'm looking at the chart of Atlas (Ticker AT) of PSE correctly.
However, the run-up has died down a bit and it's just at 11.12. Running out of breath?
Without over-analyzing the chart, I think a little bit of logic is in order. Atlas Mining had been consolidating, meaning, trading within a range with seemingly no direction, for close two to four months already. Given this, there are people who, in trading parlance are called "weak hands", sell at the first sign of trading profits.
Other than the weak hands, I think there's a need to also coin a new term, "tired hands", which to me means and refers to people who got tired of holding a stuck (as opposed to a stock) and letting go even if the trading profit is downright absurd.
I think that Atlas Mining still has legs to go. They actually reported some good numbers for the first half of this year. Atlas probably won't be covered by the more prominent stock brokerage houses as these would probably go for big names like the Ayalas and Aboitizes of the world. From their press release,
"Atlas Consolidated Mining and Development Corporation (Atlas) is pleased to report a
P460 million net income for the first half of 2010. This result shows significant progress
given the P1,169 million loss incurred at the end of the last fiscal year. The second
quarter net income is also nearly triple the first quarter income of P164 million"
Atlas should be still be treated as a speculative stock with huge growth potential for a risk-appreciative investor's portfolio. However, the entry price can be tricky. At this point, the stock price is well off of its high. Personally, I hope the stock does not fall through the roof of 11.00. If it falls down, then in my belief, the stock has reversed its trend already, and you can buy cheaper, but not necessarily right away. You will have to wait it out. Why?
This week's daily chart looks nasty and next week should be a good proving ground for this, going up? or going down? I don't know. I just hope that the cliche,"history repeats itself" does not hold true. I'm pointing to the fact that late last year, it broke away from a range, zipped to 12, then crashed back to earth. If history repeats itself, then Atlas will go through yet another consolidation phase. Maybe you'd have an early Christmas if you buy Atlas in the 4th quarter. If you're a trader, then wait-and-see would be better.
I'm not flat out recommending this stock as it can just become a stuck again as company performance wise, they have to show more consistency. At least, there's a good story to go around, from a net loss, they're swinging into profit again.
This is unlike another listed mining company, Philex. Philex is a good company but a bad stock to trade. The stock just seems to be dying a slow death in terms of share price. So don't touch it.
I've learned my lessons with most mining and basura stocks. With the stock market going up and up, you're better off trading quality stocks than buying the basuras. I suppose that's why most of the money now are in the second liners like Metro Pacific, Megaworld, etc. However, with the new administration, I hope that the government can work with both the mining companies and the local government so that a mining renaissance can happen here.
After all, the country can't purely rely on BPOs as the growth engine for its economy. Medical tourism and mining should be growth areas in the next 6-12 months.
P.S. I'm glad I recommended Metro Pacific, which to me, is a stock you can hold until you grow old. Again, provided the management team is always competent. I look at Metro Pacific as a stock you buy because of the company and its potential. As most investors say, "buy the company, not the stock." When I recommended it, it was not based on studying their FS nor its chart. It was purely out of common sense. (MPI also has interests in FOUR hospitals)
Sometimes people get lost in the "fundamental analysis" or "technical analysis" of a stock that they forget common sense. Of course, it's also a matter of asking yourself, how long will you hold the stock for?
As we speak, Metro Pacific has a TV commercial in CNBC (or was it Bloomberg? or both?). So watch out as the company draws interest from big foreign brokerage houses. A company with that much marketing muscle presupposes a lot of room for growth in the company's performance.
So until my next post, appreciate the risk, then appreciate the capital!
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