With the recent strong uptrend of Double Dragon Properties, Inc. ($DD), many started to doubt and a bit scared when buying on $DD while the price action is near double digit figure.
Is the price pattern of Double Dragon Properties, Inc following the Best World (BW) Resources, Inc stock price action? The price action is now following on uptrend and some traders are a bit hesitant to hold as the stock may collapse anytime soon which may have a similar case with BW.
On 7 April 2014, Double Dragon Properties, Inc (symbol DD) shares gained 50% to P3.00 per share from its listing price of P2 per share. A week after, the stock rose to P3.97/share. The stock has continued its strong uptrend despite the overall volatility of the market. It closed to P4.30 per share on 25 April 2014.
It was surprising that 9 days after on 9 May, the stock price opened at P5.03 (from the previous close of P4.94) and its last traded price on that same day was P6.76. After another 3 days, the stock closed at P7.73. A week after on 15 May, the price closed at 9.50! It was unbelievable trend!
Many traders and investors are speculating that the stock will fall like a heavy object being dropped from the plane at 32,000 feet. I myself has mentioned before during the IPO that the stock will return to its current fair value and in one year’s time in my “hulanalysis”, the stock will go back to below P2 a share in this link. I was wrong and it was a mistake mentioning DD will pullback less than P2 a year. There should be no mention of price but only the word “Pullback” is acceptable and necessary for a healthy stock on uptrend but this current price action is amazing. I miss the DD train but still catching up 🙂
It is hard to bet against the bullish market sentiment of the stock unless it is a jockey-driven sentiment. Who knows DD founders will achieve the 2020 vision on 100 community malls with P4.8B net income with property-consumer mix exposure, coupled with focus on leasing business. This is the difference between DD and BW.
While DD is focus on strengthening its path towards realizing its vision, BW is focus on instant money making with questionable deals and character.
While BW stock price was rising during the overall bearish market from P2/share to P107 per share, a 5,250% increase in 8-month period which ended in Oct 1999, DD is rising in a bull market starting from its listing date on 7 April 2014 at P2/share to its current price at P9.50 as of this writing, a 375% increase in 1 month and 8 days time.
Assuming the price will collapse between P2 to P5 per share, will DD rise again as the company has more potential to grow until 2020?
The only critical issue which will drive its price action to be on continuous uptrend is the realization of its vision – to become one of the leading property developers by 2020, with one million total leasable space, including 700,000 square meters of CityMall projects and 300,000 square meters of office buildings.
The founders of DD are giving the investing public the path towards the Company’s clear vision in 2020 in terms of earnings — P4.8B net income in 6 years time. Is this realistic and achievable?
Fundamentally, financial ratios such as P/E and P/BV are too high while technically, relative strength and stochastics exceed the level of overbought condition but the strong market sentiment of the stock will just ignore these criteria. We cannot understand the stock’s uptrend if we base only on fundamental analysis and technical analysis. I fail to include sentiment analysis of this stock in my previous post. There is still more opportunities to learn!
The probable collapse of its uptrending price is dependent on (1) net income 2014 will not be reached (2) net income of 1B in 2016 will not be hit (3) net income of P4.8B in 2020 will be way below the target (4) Jockeys will start dumping the shares, if there’s any for profit taking or exhaustion.
After the BW Scandal or price manipulation, Republic Act 8799 (Securities Regulation Code) was born to strengthen and effectively implement systems on full disclosure approach to regulation of the securities market, credibility of the securities market, handling of independent and professional group within PSE, protection of minority shareholders and prevention of market abuses. I don’t think it may follow a similar pattern with BW.
If DD is not BW in the making, why do we want to miss the DD train? Are we afraid to be stuck in the DD tunnel? or the risk is just too high for the reward?
Yes, It’s a high risk but high reward. I believe the stock may pullback to reflect the intrinsic value of the stock over time based on its fundamentals. The growth prospects of the stock because of the “visionary” story and realization of the vision 2020 (if it will come true) will definitely strengthen the price uptrend. A conservative price-to-earning ratio, given the vision of P4.8B net income in 2020, will surely have big impact on DD, 4 x its current price, if this vision will be realized. This is only my single-cent opinion. I fail to mention this one in my previous post.
Two scenario will happen in 2020 – First, visionary investors, in 6 years time (year 2020), watching DD running in a double-digit price of a green color ticker while reading the fundamental research of JFC-Sia-Sy new businesses of the said company. Second, the Company will not be able to sustain its growth story and the stock is moving sideways within the 5 year period and going down. Which of the two scenarios, as mentioned above, that will mostly likely to happen after 6 years? Let’s read again this post after 6 years 🙂
I still prefer to trade and err on the side of caution!
Disclaimer: This article is for information purposes only. There are risks involved with investing including loss of capital. The information provided in the website is only an opinion of the author and does not constitute as legal advice, research or recommendation to buy or sell any securities.