Weekly Philippine Stock Pick

First off, with the global stock markets and the Philippine market also heading south for the last three months or longer, it’s hard to find a low risk high reward investment in today’s current market environment. I’ve come up with I consider a safe investment right now that could at least stay ahead of inflation so you don’t loose money longer term due to inflation and erosion of your Peso purchasing power.

Many stocks worldwide and within the Philippines are trading with very low Forward PE price to earnings ratios. Just because they look cheap doesn’t mean its time to buy in now. What looks cheap could just keep getting cheaper for awhile longer until investors and traders decide its time to stop selling, and time to start buying. My following stock pick looks cheap, and has the potential of a decent return on investment in the short, intermediate, and long term. In case the market proves me wrong, I’ll get out of the position with modest 8% loss.

My weekly Philippine Stock Pick the week is Union Bank. Ticker UBP

Entry Price: Current price of P35.5. Take Profit: P45.00 or below or leave open for a possible longer term profit potential. Stop-Loss: P31.80, its recent low on January 22. This investment trade plan allows for about an 8% stop-loss with a possible 25% - 30% return, which is well within my reward risk ratios parameters to put real money on the table.

UnionBank is a partnership among the Aboitiz Group, Insular Life and Social Security System. It started operations in 1981 and became a commercial bank by January 19, 1982. In July 1992, UnionBank was granted the license to operate as a universal bank. The bank acquired the International Corporate Bank (Interbank) in 1994.

Among Philippine banks, UnionBank stands out for its strategy, execution and performance. While many banks went for size and market share via large balance sheets, UnionBank has followed a highly focused differentiation strategy that emphasizes innovation and service. It has put technology at the heart of its business. Information and network access is a core UnionBank offer. Today multiple channels are available for transaction and information access: 111 branches nation wide, 94 ATMs (as of June 2004), a call center and Internet bank, www.unionbankph.com.

UnionBank is among the industry's best in key performance measures: absolute profit, cost-to-income ratio, return on equity, return on assets, revenue/expense ratios, market capitalization, and earnings per share. In 2002 & 2003, the bank was recognized as among Asia's best companies by Euromoney and Finance Asia. UnionBank is also the country's only bank to make it to the list of the world's 25 soundest banks for four consecutive years by The Banker of London.

In strategic business, the bank is a recognized leader and premier provider of corporate cash management & B2B solutions to leading local and multinational companies. Its other strengths are in Treasury services & capital markets, Internet banking, consumer finance and distribution network.

Recent Unionbank News

UnionBank Net Income Hits Php2.9 Billion in 2007

UnionBank of the Philippines registered a net income of Php2.90 billion for the year 2007, 15.54% higher than Php2.51 billion the Bank earned last year. Revenues across businesses improved 13.02% to Php8.42 billion from Php7.45 billion. Gross interest income on loans grew by 8.71% to Php3.62 billion from Php3.33 billion while service charges, fees and commissions stood at Php0.85 billion, 18.06% more than Php0.72 billion last year.

The Bank's asset base grew to Php187.99 billion in 2007 from Php183.19 billion last year. Loan portfolio stood at Php44.01 billion while deposits stood at Php106.76 billion. Capital base rose by 32.46% to Php26.36 billion from Php19.90 billion due to strong internal capital generation and proceeds from the follow-on equity offering in the first half of the year. The Bank's capital adequacy ratio was at 16.44%, inclusive of credit, market and operational risk charges, which is above the minimum requirement of 10%.

Non-performing loans ratio declined to 3.6% in 2007 from 4.9% in 2006 partly as a result of the Bank selling Php2.0 billion worth of bad loans. The Bank also sold Php282.0 million worth of real and other properties acquired.

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Good day, good investing for your financial freedom future!