Ok, it seems scary to be value investing in the Philippines today. The Philippine Stock Market has been on the decline recently. The experts and talking heads blamed Trump’s Trade war. Others blame President Duterte’s mismanagement and the effect of Typhoon Ompong. But I am not here to forecast or even try to predict the macroeconomic factors that affects the price of the stock. I am here to know if its an already undervalued stocks in the Philippines.
There are different ways to know if the stock is undervalued. The easiest one is to look at its PE ratio. The lower the PE ratio, the more undervalued the stocks. Here’s a list of the top 20 low PE stocks in the PSE.
Top 20 Lowest PE Stocks
As you can see, there are a lot of stocks that are below 10 in PE ratio. Some of them even have a PE or 3. There are reasons for that. Low PE stocks are ugly and not very attractive to investors. They might be unknown companies and probably have stories so bad that people avoid them or even worse, sell them. But remember, that’s the reason why its cheap.
Its up to the value investor to know if those companies can bounce back from its bad stories. Businesses suffer cycles of profitability and near-miss bankruptcies, its up to you to know if that’s the case. Also, sometimes, you’ll find gems that have no bad stories in them, its just that people ignore them. The neglected stocks.
If you buy those low pe undervalued stocks, remember that you will have to be patient. And you might have to hold on to those stocks for years. So its important to remember your reason for buying in the first place.