Manila Electric Company (MER) will likely turn the lights on and head higher in the very near term. As you can see from its chart, the stock has just escaped a 2-year consolidation when it surpassed its resistance at Php285.00. Note that its upside breakout has actually been preempted by the higher low bases that it had built. Despite its negative trend back in the first half of 2013 and the rather neutral trading that it had seen since then, the said higher low bases actually indicated that the market had already been silently going long on the stock even at relatively higher prices. In any case, MER will likely trek north on a faster pace towards its pattern target of Php320.00 to Php325.00. By the way, consensus has a slightly lower fair value objective of Php312.25 (as of June 4) for the stock. It is also important to recognize that Meralco may likewise be a candidate later on to receive a positive weight adjustment in the next PSEi and MSCI Philippines Index rebalancing due to its improvement in free-float.
*Consensus target price or average target price given by the major foreign and local brokers of various stocks on top of index names are available in our Equity Advisor!
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