The question of the week comes from one of IC Insider.com’s readers. “ I’m trying to understand more about investing and would like to know about buying stocks at the IPO price, selling when they go up and then buying when the prices settles lower? Does it make sense to do so?
The answer to the question is yes and no. it can be done but understanding where the stock may top out initially, is going to be the key. You have to determine the price to sell at and then identify when to get back in, as well as where the price may go after reentry. Those targets are not always easy to assess. A good example is Main Event, it went to $5 early after listing and then pulled back a bit and went over $8 and pulled back to $4.85 last Week. Express Catering went over $5 initially and pulled back to $3.80, traded recently at $5.60 and pulling back again. Trading fees can cost up to 5% to get in and out that needs to be factored into the equation of potential trades as well.
Knowing the PE and how the stock compares to others in the market, will help a great deal to determine the likely top for a stock. The use of PE ratio and comparing them with other stocks gives a good indication which stock has a better valuation, but it may not tell when that difference will be eliminated. Currently, just below 20 times current earnings, seems to be a good exit point as the target for IPOs and say 20% or so below could be a good reentry point.
Picking tops and bottoms in markets is not always easy, unless historical records are used in the assessments. This technique is better known as technical analysis where markets or products, in this case stocks, establish set price patterns over time, often trading within what’s called a channel. Channels allow investors to better pick tops and bottoms, while the items is trading within the channel.
Archives for August 2017
Is trading IPO issues a good idea?
Inflation eases in July
Inflation in Jamaica eased a bit in July to 0.6 percent compared to June 0.07 percent, according to data released by the Statistical Institute of Jamaica (Statin).
“For the second consecutive month the division Food and Non-Alcoholic Beverages recorded the highest movement of 1.2 per cent. This was primarily due to an upward movement in the class ‘Vegetable and Starchy Foods up by 3.8 per cent,” Statin stated and the Transport division rose 0.3 percent. Housing, Water, Electricity, Gas and Other Fuels decreased by 0.3 percent a result of lower electricity rates.
Inflation for the calendar July come out at 2.7 percent, while the movement over the last twelve months runs at 4.5 percent, slightly more than the 4.4 percent at June.
Forex inflows falls to US$43.5M – Wednesday
Trading in the Jamaican foreign exchange market on Wednesday resulted inflows of US$43.52 million in contrast to US$53.68 million on Tuesday and outflows of US$32.38 million compared to US$37.34 million of all currencies previously.
Approximately, 25 percent of the intake is to be surrendered by dictate to Bank of Jamaica and would amount to $11 million, which is line with the net inflows of $11 million.
In USA dollar trading, inflows ended at US$38.58 million versus US$47.98 million on Tuesday with outflows of US$27.58 million compared to US$33.04 million.
The value of the Jamaican dollar fell in value against the US dollar, with the selling rate ending at J$128.49 from J$128.23 previously. Dealers bought the US currency at an average of J$127.32, versus J$127.22 on Tuesday.
The selling rate for the Canadian dollar slipped to J$101.54 from J$101.82 at the close on Tuesday while the British Pound was slightly less costly at the close, with J$165.40 buying the British currency versus J$165.60 and the euro, gained in value against the Jamaican dollar, with it taking J$151.97 to buy the European common currency, versus J$151.80 previously.
Stocks mostly rise on TTSE – Wednesday
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NCB Financial Group closed at a new high on the Trinidad & Tobago Stock Exchnage.
The Trinidad & Tobago Stock Exchange on Wednesday traded 14 securities compared to 15 on Tuesday with market volumes rising above the previous day and all indices recording gains modest gains with stocks rising out numbering those falling.
At the close, 5 stocks advanced, 2 declined and 7 were unchanged as 388,836 shares traded at a value of $2,901,484 compared to Tuesday’s trades of 184,873 valued at $2,280,674.
The Composite Index advanced 2.65 points to 1,222.56, the All T&T Index gained 0.39 points to 1,792.33 and the Cross Listed Index was up 0.67 points to 87.56 points.
IC bid-offer Indicator| The Investor’s Choice bid-offer ended with 5 stocks with bids higher than last selling prices and 5 with lower offers.
Gains| Stocks trading with the prices rising and the volumes changing hands at the close are, National Enterprises that gained 1 cent to close at $10.48 exchanging 3,050 shares, National Flour Mills trading 13 cents higher to $2.13 with 40,958 shares, NCB Financial Group closed at a 52 weeks’ high of $4.29, adding 9 cents with 15,000 shares. Prestige Holdings closed with a 1 cent gain to $10.65 trading 200 units and Sagicor Financial climbed 5 cents to $8.20, with 493 units changing hands.
Losses| Stocks trading with the prices falling and volumes changing hands at the close are, Guardian Holdings closing at $16.50, with a loss of 1 cent trading 23,100 shares valued at $380,950 and Trinidad & Tobago NGL falling 5 cents to $23.40 exchanging 12,431 shares.
Firm Trades| Stocks trading with the prices unchanged and volumes changing hands at the close are,Clico Investment traded 35,852 shares at $21 valued at $752,807, First Citizens closing at $31.67, with 250 units changing owners, Grace Kennedy closing at $2.85, with trades of 441 units. JMMB Group closed at $1.20 with an exchange of 220,204 shares, Massy Holdings exchanged 15,000 shares at $48.95 valued at $734,250, Republic Financial Holdings closed at $101.91 trading 1,939 shares and Trinidad Cement ending at $4.14 with 19,918 shares.
Huge improvement at Jamaica Producers
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Jamaica Producers at $14.50, currently.
Jamaica Producers made huge improvement in its operations, with strong gains in operating profit, helped by consolidation of Kingston Wharves but more importantly major gains from its other core business.
The company reported profit attributable to shareholders of $158 million for the second quarter to June and $251 million for the half year to June, 2017.
The results flowed from revenues of $7.4 billion up from $4.6 billion in 2016 for the half year and $4 billion for the quarter, up from $2.4 billion in 2016. In 2016 the group’s share of Kingston Wharves was treated as an associate as such the revenues for 2016 does not include that for wharf as is the case in 2017.
The results translate to 14 cents per share for the quarter and 22 cents for the half year and should end around 50 cents for the year. With a stock price of $14.50 the market value is a very rich 29 times earnings.
Securities trading jump on Tuesday
Trading in the Junior Market of the Jamaica Stock Exchange closed on Tuesday with a number of stocks declining out pacing those rising. The volume and value of stocks traded declined compared to that on Monday while the market index closed lower by 38.26 points to 3,157.46.
The Market closed with 2,187,410 shares valued at $12,791,307 trading compared with 5,636,428 valued at $31,083,116 on the previous day. A total of 28 securities traded compared 22 on Monday as 17 stocks declined, 2 advanced and 9 traded firm.
At the close of the market, stocks trading and their last traded price are: Access Financial with 35,383 shares trading, closed with a loss of 30 cents to end at $46.20, AMG Packaging closed with 25,000 shares at $3.50, Blue Power had 5,450 units changing hands with fall of 50 cents to $41.50, Cargo Handlers with a loss of 30 cents, closed at $10.70 with 18,817 shares, Caribbean Cream closed with a loss of 84 cents, at $5.90 with 24,346 shares, Caribbean Producers ended 11 lower to $3.39 with 13,000 shares, Consolidated Bakeries lost 12 cents and closed at $2.50 with 1,627 shares, C2W Music closed at 38 cents with 18,237 shares, Derrimon Trading with a loss of 10 cents, closed at $7.90 with 12,065 shares, Dolphin Cove closed at $17.50 with 2,185 shares, Express Catering ended 20 cents higher at $5.30 with 319,964 shares, General Accident closed at $3.30 with 46,866 shares, Honey Bun closed 20 cents higher at $5 with 4,066 shares, Iron Rock closed at $3 with 38,000 shares, Jamaican Teas closed at $4.70 with 7,346 shares,
Jetcon Corporation with a loss of 1 cent, closed at $5.30 with 176,320 shares, KLE Group closed at $2 with 23,000 shares, Key Insurance with a loss of 5 cents, closed at $3 with 5,000 shares, Knutsford Express closed at $15 with 9,850 shares, Lasco Distributors with a loss of 15 cents, closed at $6.55 with 149,100 shares, Lasco Financial traded at $4 with 54,927 shares, Lasco Manufacturing with a loss of 37 cents, closed at $4.33 with 41,292 shares, Main Event fell 5 cents, and closed at $4.95 with 117,083 shares, with a loss of 5 cents, Medical Disposables closed at $5 with 200,000 shares, after falling 50 cents, Paramount Trading eased 5 cents closed at 5 cents with 47,256 shares, Stationery and Office Supplies traded 725,061 units with the price falling 41 cents to $4.99, Sweet River dipped 3 cents, to $3.52 with 60,169 shares and tTech dropped $1 and closed at $6.80 with 6,000 shares.
Forex inflows jump to US$54M – Tuesday
Trading in the Jamaican foreign exchange market on Tuesday resulted inflows of US$53.68 million in contrast to US$30.45 million on Monday and outflows of US$37.34 million compared to US$27.05 million of all currencies previously.
Approximately, 25 percent of the intake is surrendered by dictate to Bank of Jamaica and would amount to $13 million, which is more than the percentage of the net inflows equal to $16 million.
In USA dollar trading, inflows ended at US$47.98 million versus US$25.6 million on Monday with outflows of US$33.04 million compared to US$24.65 million.
The value of the Jamaican dollar rose in value against the US dollar, with the selling rate ending at J$128.23 from J$128.40 previously. Dealers bought the US currency at an average of J$127.22, versus J$127.01 on Monday.
The selling rate for the Canadian dollar slipped to J$101.82 from J$101.85 at the close on Monday while the British Pound was slightly more costly at the close, with J$165.60 buying the British currency versus J$165.57 and the euro, gained in value against the Jamaican dollar, with it taking J$151.80 to buy the European common currency, versus J$150.48 previously.