The local stock market is seen moving sideways as it benefits from quarter-end window dressing and some bargain hunting although cautious investors may opt to hold on to cash ahead of the long Easter weekend.

“At 6,881.97, the local market is still at attractive levels with a price-to-earnings ratio of 14.1 times, lower compared to its 2019 to 2023 average of 18.2 times. This shows that there is still room for bargain hunting,” said Philstocks Financial Research Manager Japhet Tantiangco. 

He noted though that “the market is not seen to have a strong positive catalyst. Hence, with next week’s shortened trading week, cautious sentiment is expected to linger which in turn could lead to a sideways movement for the bourse.”

“Looking at other markets, Wall Street’s rally, if sustained, may give positive spillovers to the local bourse which could help it move with an upward bias. Meanwhile, the Peso’s depreciation against the US Dollar, if it continues, may weigh on market sentiment,” Tantiangco added.

Online brokerage 2Tradeasia.com said that “with 85 percent of the total weighted index reported their 2023 results; this past earning season has been encouraging, printing core weighted EPS growth of 10 percent (on reported issues). As expected, key holdings, banking, property, gaming and power drove the growth." 

“While we continue to see positive momentum in these sectors heading into the second quarter, broader valuations remain low relative to regional peers-outside of potential spoilers in inflation (summer seasonality) and persisting interest rate sensitivity of funds, the runway for upside remains clear despite the apparent end of the late 2023 rally at 6,800-6,900,” it also said.

The brokerage firm added that “brace for month- and quarter-end window dressing in the upcoming shortened trading week, whilst anticipating potentially lower volumes ahead of Lent.”

For stock picks, both Abacus Securities Corporation and COL Financial have BUY ratings for AboitizPower.

Abacus said that, while analysts are projecting flattish growth this year, “we believe (this) is too conservative considering the expected capacity expansion.”

“We estimate AP’s portfolio to expand by 15 percent this year with 650MW of additional renewable capacity coming online. Another 350MW of attributable RE capacity is slated to start operations by 2025," it said. 

Abacus added that "these figures do not include yet the recent transaction with San Miguel and Meralco, which gives AP an effective economic stake of 27 percent in Ilijan (1,278MW) and one other natural gas plant under construction (1,320MW). Upon securing regulatory approvals, this would augment AP’s attributable capacity by another 700MW and should boost earnings even further moving forward."

Meanwhile, COL said, “we like AP as we believe that it long term earnings growth outlook has improved following the ramp up of its renewable energy capacity expansion initiative. Furthermore, valuation is also cheap.”

Abacus is rating SM Investments a BUY despite the recent rise in its share price after the brokerage upgraded its target price to P1,130 per share by the year’s end because of last year’s impressive earnings and “there seems to be momentum for forecasts to go even higher.”

COL also has a BUY rating for Universal Robina Corporation because of its “strong core branded businesses where it has continued to hold its market leadership position in several consumer goods categories.”