{"id":323653,"date":"2023-06-14T23:20:00","date_gmt":"2023-06-14T15:20:00","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323653"},"modified":"2024-09-01T22:39:12","modified_gmt":"2024-09-01T14:39:12","slug":"here-are-2-stock-picks-amid-the-looming-mild-recession","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/here-are-2-stock-picks-amid-the-looming-mild-recession\/","title":{"rendered":"Here are 2 stock picks amid the looming ‘mild’ recession"},"content":{"rendered":"\n

Analysis and Recommendation<\/h2>\n\n\n\n

Minutes from the U.S. Federal Reserve (Fed)\u2019s May 2023 meeting showed that policymakers are still expecting a mild recession in the U.S. later this year. Same story in the Eurozone, where downward revisions in GDP data in the 1st quarter (1Q) this year from Germany and Ireland led to negative GDP growth in the Eurozone. <\/p>\n\n\n\n

In both the U.S. and Eurozone, manufacturing and non-manufacturing PMIs have trended lower following the rise in inflation after Russia invaded Ukraine. The PMIs also saw a consistent decline and contraction as aggressive interest rate hikes start to bite.<\/p>\n\n\n\n

Meanwhile, in China, while 1Q GDP growth remained robust, leading economic indicators point to a slowdown in the coming quarters. China\u2019s export-driven manufacturing industry is still in the doldrums as global demand weakens, while services are still trending lower as unemployment rises. China jobless rate eased to 5.2% in April from 5.3% the previous month, but youth unemployment surged to a staggering 20.4%.<\/p>\n\n\n\n

On the local forefront, the Philippines may see GDP growth slow to 5.0% or lower in the second half of the year, but policymakers maintain their 6-7% target. On a per sector basis, the country’s GDP growth in 1Q was driven primarily by services.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

<\/p>\n\n\n\n

Given the strong performances and further upside for transportation & storage<\/strong>, and accommodation & food services<\/strong> as seen above, we recommend two names with high potential.<\/p>\n\n\n\n

1. Cebu Air Inc. (CEB) – Buy, Target Price: P55.67<\/h3>\n\n\n\n

Given CEB\u2019s market leadership in the domestic space, the surge in passengers flown should translate to robust growth. While revenues may still not yet fully return to pre-pandemic levels (due to foreign tourists still lagging), this should further drive profitability which is already performing ahead of expectations. Strong operating leverage will naturally result from this, as most of CEB\u2019s costs (excluding fuel) are fixed, and will expand at a slower pace versus the topline.<\/p>\n\n\n\n

CEB could benefit as the country’s tourism is primed for solid growth. The Department of Tourism expects a solid rebound in both domestic and international tourists (though at a lesser extent) for 2023. While foreign arrivals will still likely lag pre-pandemic levels at 4.8 Million (versus 8.26 Million in 2019), domestic travels should make a full recovery.<\/p>\n\n\n\n

2. Bloomberry Resorts Corp. (BLOOM) – Buy, Target Price: P13.15<\/h3>\n\n\n\n

BLOOM is expected to benefit from increased entertainment-related spending. Total entertainment-related expenditure by consumers jumped by 33.8% during the 1st quarter this year. While low base effects undoubtedly played a part here, we expect this to continue in succeeding quarters as the return to normalcy drives mass consumption of casino games and the demand for hospitality. This should benefit both gaming and non-gaming revenues for BLOOM.<\/p>\n\n\n\n

Despite the absence of Chinese junkets for the VIP segment, growth should be supported by the Mass and Slots segments. Demand for this will come from the strong entertainment-related expenditure of locals, while the hefty inflows of Korean tourists should make up for Chinese absence. The strong domestic demand for Mass will be beneficial for profitability as Hold Rates for Mass Tables are the highest among all 3 segments, which should help support growth in gross gaming revenues.<\/p>\n\n\n\n

<\/div>\n\n\n\n

This report is prepared by PinoyInvestor\u2019s partner broker below. Find out more about our partner brokers<\/a> and sign up to avail their complete trading brokerage services.<\/em><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Here\u2019s a commentary on an important issue or event affecting the stock market<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1372,11],"tags":[],"class_list":["post-323653","post","type-post","status-publish","format-standard","hentry","category-stock-picks","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/323653","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=323653"}],"version-history":[{"count":1,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/323653\/revisions"}],"predecessor-version":[{"id":323656,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/323653\/revisions\/323656"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=323653"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=323653"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=323653"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}