Powering for Profits in the Philippines

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

And this week’s Global Bull Market Alert pick, Philippine Long Distance (PHI), is the best way to profit from the Philippines’ new found resurgence.

The credit for this turnaround goes to President Gloria Galapagos Arroyo’s measures to get the Philippines’ economic act together. Prior to Arroyo’s arrival on the scene, the country had developed a chronic dependence on foreign borrowing and a large budget deficit. But beginning in early 2005, Arroyo introduced measures that reigned in foreign borrowing, clamped down on spending and increased sales taxes.

The results have been impressive. The Philippines posted a budget surplus for the fifth straight month in September. Moody’s Investors Service took notice and revised the outlook of the Philippines’ credit rating to stable from negative, nine months after Fitch Ratings and Standard & Poor’s did the same.

Another sign of increased confidence? The Philippine peso is strengthening against the U.S. dollar day after day. This trend provides an additional tailwind to the returns enjoyed by U.S. dollar-based investors.

This week’s pick, Philippine Long Distance (PHI), is the Goliath in the Philippine stock market, accounting for a large chunk of its entire market cap. Think of it as a proxy for a market that doesn’t have an exchange traded fund. And with the company trading at a P/E of 11.5, you’re buying it at a 30% discount to its counterpart in nearby Indonesia.

So buy Philippine Long Distance (PHI) at market today and place your stop at $44.75. For potentially even bigger profits, buy the March $55 options (PHICK.X)

PORTFOLIO UPDATE

To make room for PHI, sell your shares in Brazilian airline manufacturer Embraer (ERJ) for a small gain. Otherwise, all eight positions in the Global Bull Market Alert portfolio are profitable. Last week’s pick, Indian banking play ICICI bank (IBN), roared ahead almost 8% in just 5 trading days. The options are up almost 53%. Move your stop to $35.30. Millicom (MICC) is now up over 28% — with the options up 211%. Move your stop to $47.50. The gain on the Swedish ETF (EWD) is into double digits — rocketing up at an annualized 93% since our recommendation. Move your stop to $28.75. Spanish telecom play (TEF) is in double-digit percentage gain territory — with the options already up 181%. Move your stop to $56.50. Also move your stop in airline Copa Holdings (CPA) to $33.50.

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The emergence of India is one of the most popular global investment themes of the decade. With the Indian economy expanding at 8% per year and earnings at Indian blue chips growing at an average of 30%, it's no wonder that India's stock market broke through the 13,000 for the first time ever last week. And this week's Global Bull Market Alert pick, ICICI Bank (IBN), India's largest private sector bank, offers the single best way to profit from the explosive growth in India's booming financial se

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