Ready for a correction? Take the advantage....
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Ready for a correction? Take the advantage....
In my last article, in early October, I gave my opinion why stock market were getting higher and higher - that was: slump in housing market of US. Although, today we got a surprising commentary of Alan Greenspan (ex-chairman of FED - Federal Reserve) that said that the correction in housing market is nearly the end and that maybe we're getting a stabilization in house prices. That's for sure good news for financial sector (we're not heading a credit crunch in mortgages!) and very good for US economy, but not so good for stock markets! Why? Very simple, the flow of money from real estate to stockmarkets will be lower! :-)
My big worry is that stockmarkets are getting higher without a correction, and in my point of view that is very dangerous. Please check bellow the weekly chart of IBEX (spanish index):
This chart is incredible, we got sequence of 7 weeks in a row with green candles (positive). What can we expect from now on? Well, first of all, let me tell you that I'm BULL in the long term. But in the short term, I would not buy any stock! We're overbought, it's a question of time... markets must take a breath! They must make a correction!
Talking about sectors, I insist in Telecoms and in banks. If there is a market correction soon, I would take the advantage and I would buy Deutsche Telekom and France Telecom in the telecom sector and BBVA and BCP in bank sector.
Last time I told you about DT and FT they were trading at 12,60€ and 18,41€ respectively. Today (27th October) they closed at 13,52€ and 20,56€. In my fundamental analysis they still have a lot of upside potential.
DT trading at 13,52€ has an ev/ebitda=5,14.
FT trading at 20,56€ has an ev/ebitda=5,50.
If DT and FT adjust to the telecom sector average of ev/ebitda=9, they have an upside potential of 30,5€ for DT and 45,5€ for France Telecom. I think that this market distortion takes time to be corrected but I expect in 2 or 3 years, they will trade at those levels.
Enjoy your investments!
Filipe Vasconcelos
PS: gráfico em http://filipevasconcelos.blogspot.com
My big worry is that stockmarkets are getting higher without a correction, and in my point of view that is very dangerous. Please check bellow the weekly chart of IBEX (spanish index):
This chart is incredible, we got sequence of 7 weeks in a row with green candles (positive). What can we expect from now on? Well, first of all, let me tell you that I'm BULL in the long term. But in the short term, I would not buy any stock! We're overbought, it's a question of time... markets must take a breath! They must make a correction!
Talking about sectors, I insist in Telecoms and in banks. If there is a market correction soon, I would take the advantage and I would buy Deutsche Telekom and France Telecom in the telecom sector and BBVA and BCP in bank sector.
Last time I told you about DT and FT they were trading at 12,60€ and 18,41€ respectively. Today (27th October) they closed at 13,52€ and 20,56€. In my fundamental analysis they still have a lot of upside potential.
DT trading at 13,52€ has an ev/ebitda=5,14.
FT trading at 20,56€ has an ev/ebitda=5,50.
If DT and FT adjust to the telecom sector average of ev/ebitda=9, they have an upside potential of 30,5€ for DT and 45,5€ for France Telecom. I think that this market distortion takes time to be corrected but I expect in 2 or 3 years, they will trade at those levels.
Enjoy your investments!
Filipe Vasconcelos
PS: gráfico em http://filipevasconcelos.blogspot.com
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