Stock pick: RFM Corp. (RFM) Recommendation: Buy

HDI SECURITIES, Inc. has placed a “buy” tag on RFM Corp. shares on expectations the food and beverage company will continue to perform strongly this year.

“We continue to be bullish on the consumer sector and believe that RFM has the potential to catch up with other consumer stocks, many of which have had considerable run-ups in the last two or so years,” said research and finance analyst Paolo Vicente A. Bernardo.

“Relative to other consumer stocks, RFM is undervalued with a forward P/E (price-to-earnings ratio) of 17.76 times (x), compared to the industry average of 24.18x,” he added.

Mr. Bernardo also cited RFM’s firstquarter earnings, saying that although RFM’s current figures represent only 19% of their P13.3 billion and P921 million revenue and income full-year estimates, respectively, it should be noted “that the first quarter is typically lean, especially compared to the summer months and the holiday season.”

“[M]anagement has stated that costs are starting to go down as it rationalizes its supply and distribution system. Thus, we have no reason to believe that RFM will not meet our forecasts,” Mr. Bernardo said.

In a disclosure to the Philippine Stock Exchange on April 28, the food and beverage manufacturer said its net income went up 8% to P179.4 million in the first quarter as revenues grew 15% to P2.6 billion on the back of “strong” sales in its ice cream brand Selecta and pasta brands Fiesta and Royal.

RFM shares were last traded at P5.15 apiece last Thursday, down P0.04 centavos from the day before.

Mr. Bernardo placed the stock’s support and resistance at P4.72 and P5.20, respectively.

— Dianne Orendain