The market closed in the green for the year at 8,558, hitting historical highs so many times, led by index heavyweights BDO, SM, SMPH, and ALI! With their sheer weight alone, as they went up, so did the PSEi. While we are to celebrate the winners, we should also talk about the losers and what we could learn from them. This so we use that knowledge to make 2018 our best trading year yet! If you have lost money from these stocks, don’t ever let your mistakes define who you are. Learn from it then move on forward!
Of course, the stocks in the list are not the stocks that you want to own. This article will focus on the bottom three performing stocks for 2017 and what caused them to drop and what did the charts say above its movement. If you looked at the technicals and fundamentals of the three stocks, you would know that both were consistent in telling us to avoid the stock for 2017!
Catch me in my live training events! (quick plug)
The heart of why I do this seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more on how you could time the market checkout the trainings below.
Stock Smarts Cagayan De Oro — January 13 – 14, 2018
Investor Insights 2018 — January 20, 2018
Stock Smarts London, United Kingdom — January 26 – 28, 2018
Stock Smarts Dubai, UAE — February 9 – 12, 2018
Stock Smarts Manila — March 3,4,17,18 & 24, 2018
WORST PERFORMING STOCK # 3 – DIZ
Dizon Copper Silver Mines Inc.
Stock Price as of December 29, 2017: 7.1
Macroeconomics: Not where the economy is headed
Fundamentals: The company is losing money
Possible Reversal: A possible reversal point would be a breakout from 8.60. It also needs to actually make money.
THE MINING INDUSTRY WENT A STEP BACKWARD
On a macroeconomic level, the mining industry had a huge beat down this year and all the negative sentiments brought about by the government’s direction against mining companies.
THE COMPANY IS LOSING MONEY
The company has lost money for the past five quarters and for the past five years straight. Why invest in a company that hasn’t seen a profit since 2012?
WHAT IS LOW WILLL KEEP GOING LOWER
The stock turned bearish after the breakdown from the 12.60 level. After that it was downhill from that point on and it has not returned since then. All oscillators and chart overlays still point to the fact that the stock is still bearish even though it has been strongly battered down.
WORST PERFORMING STOCK # 2 – NI
NiHAO Mineral Resources International Inc.
Stock Price as of December 29, 2017: 1.51
Macroeconomics: Not where the economy is headed
Fundamentals: The company has a track record of net losses
Possible Reversal: A possible reversal point would be a breakout from 2.
THE COMPANY HAS A TRACK RECORD OF LOSING MONEY
The company has lost money in 2013, 2015 and 2016. Not to mention all the negative publicity the mining sector has been getting lately.
AS BEARISH AS IT CAN BE
Similar to DIZ, the stock broke down from a support level and has never looked back. For NI, that support level was at 2.95. After breaking down from that level the stock has fully reversed into a downtrend. Please avoid the stock until a clear reversal actually occurs.
WORST PERFORMING STOCK # 1 – CHP
Cemex Holdings Philippines Inc.
Stock Price as of December 29, 2017: 4.88
Macroeconomics: Cement sales have been down across the board
Fundamentals: Lower 3rd Quarter earnings
Possible Reversal: A possible reversal point would be a breakout from 6.3.
THE CEMENT INDUSTRY TOOK A BEATING
To be fair it is not just CHP who got hit this year but all of the listed cement stocks. HLCM received lower earnings for the quarter while EAGLE grew but its growth was lower than what was expected of it.
THE COMPANY HAS DECLINING INCOME
Unlike DIZ and NI, which are both losing money. Cemex actually turned a profit, however the income was lower than the previous quarters and was much lower than what was expected. The company reported a 79% drop in its Q3 earnings at 202 million Pesos while its nine-month earnings dropped -63% to 688 million Pesos.
In the stock market if the stock fails to meet expectations, the stock price will be in trouble.
DON’T JUST BUY A STOCK BECAUSE IT IS LOW
Don’t just buy a stock because it is low, buy it when it has stopped falling and is now starting to reverse upward. That’s what happened to this stock, the stock broke down from 11 then 7 and lastly 5. People started buying after the breakdown at 7 because the stock was perceived to be cheap. The sad thing is, those who bought at 11 are taking large losses at this point in time. Do not just buy a stock because it is low, check the fundamentals if it is actually cheap and and the technicals to see if the stock is actually reversing.
If you noticed it from the charts, the pattern and the look of the stocks that have broke down all look the same regardless of the reasons as to why the stock the stock started to spiral down. For CHP the stock broke down from a key support range at 11 and after that the downtrend further progressed. Please avoid the stock until we see a clear reversal take please.