Puregold Price Club, Inc. (PGOLD) has recently rallied by 25% since its low of Php36.00 on the back of a robust outlook towards the retail consumer space. A lot of institutional investors are banking that the comprehensive tax reform that the government is currently pushing will induce more personal consumption as it aims to reduce the personal income tax from 32% to a maximum of 25%, thus placing more disposable income in the hands of workers. Of course, the likes of PGOLD, RRHI, and JFC will be a direct beneficiary of the likely increase in personal consumption. At present, PGOLD still has a 12.59% upside towards its consensus fundamental target of Php49.82 for 2017. While the stock may likely continue to grind towards the said target and revisit its all-time high, its parent company in Cosco Capital, Inc. (COSCO) appears to provide an even ‘cheaper’ alternative.
Technically, COSCO has just reached its interim resistance of Php9.30 since it broke its prior resistance of Php8.80. While profit taking activities around the mentioned resistance may temporarily cap its ascent, an eventual break above the said handle may lead it close to its consensus fundamental target of Php11.82. As some of you may know, COSCO owns a 51% stake in PGOLD. Hence, the parent company will profit as well as its retail arm expands. Even if the stock only reaches its next notable resistance of Php11.16, the stock still presents a 20.78% upside from its present score. Caveat.
COSCO write-up from the Trading Edge Equity Advisor:
January 12, 2017
Cosco Capital, Inc. (COSCO) may likely rise by about 4.50% in the next several days. As you can see, the stock has just broken above the resistance of an interim consolidation. Its move past its prior hurdle at Php8.80 should then lead it towards its next resistance at Php9.30.
*Consensus target price or average target price given by the major foreign and local brokers of various stocks on top of index names are also available in our Equity Advisor!
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