Adding back a top-notch infrastructure stock.

I would now add back STECON to a diversified portfolio of Thai stocks.

The recent stock market rally has left many value shares behind. Its been lead mostly by the large cap shares in the Chemical, Energy and Shipping sectors. This is not surprising as foreign institutional buying have been the leading force and they are handcuffed in most only owning liquid stocks. While I had good exposure in the model portfolio with NPC, ATC and TTA, most of our select high dividend stocks have been left behind.

It will be interesting to see how well the SET market here holds up this week considering record high energy prices and uncertainty over the Nov 8 US election.

In almost all past rallies, as the SET consolidated, secondary shares catch-up. Hence I would now take some selective profits on the glamour big cap petrochemical shares and move some of the profits into the value shares. There is of course a chance the pervasive big cap rally will continue -but I would view this more as irrational exuberance than a new correct vision. In time the "locals" and many individuals will catch on that Thailand is doing better than they perceived -and as compared to the rest of the world. Then the rally will/should broaden out and some serious catch-up should materialize. I remain with my conviction on this.

Stecon is one stock which today got my attention again. It appears now oversold and should have a good upcoming year, after this year's temporary set back. As Mr. Thaksin gets re-elected, infrastructure projects will surge and Stecon should benefit. The trailing p/e is just now a rich 20, but this masks the fact that the company had a temporary shortfall in the first and second quarter this year, due to converting cash into steel and other raw materials. While the third Quarter may not see the turnaround yet, it pays to add this liquid stock back before the trend is apparent.

Stecon stock is down from the 18 to 22 range earlier this year and lost about 20% in value since I removed it from the model portfolio, just a few months ago. The stock symbol is STEC.

I here and today want to state that I would now add back STEC(8.65), to a diversified portfolio of solid Thai stocks.  Monday October 11, 04 09:30 AM

Best Regards

Paul A. Renaud