Barita up 61% & exits top 5 Pulse in

Barita Investments looks like the stock to deliver the best returns in the main market of the Jamaica Stock Exchange, was the lead to IC Insider’s start to the TOP 5 series in September. The stock priced then at $3.15, is now out of the TOP 5 main market list with a 61 percent gain, when it closed the week at $5.
Barita has been replaced by Pulse Investments. The latter just released the September quarterly report with the best quality of earnings in years, with an improving cash flow compare with prior periods and increased earnings of 32 cents per share. Excluding fair value gains on real estate holdings, earnings per share would be around 23 cents or 90 cents per share annualised. The stock price has room for growth in the coming months.
The recommendation to buy Barita was a bold one, coming against the background of a stock that had not performed well in recent times before September as well as that a large brokerage house in August, recommended investors to sell the stock based on a number of factors. Specifically they said, “Initiatives implemented during the last financial year have thus far been successful in supporting both net interest income growth as well as fee income. The recent rally in Emerging Market bond prices should help Barita to recover from the decline experienced in the period. That said, we expect just a marginal increase in year on year net profit. Given this expectation we estimate BIL shares to be valued at approximately $2.35 by applying the market average P/E to estimated EPS. Therefore at a current market price of $3.10, we are recommending a SELL on BIL”. Interestingly, IC Insider assessment indicates that based on the extremely good quality of the company’s fourth quarter earnings, profits should be hitting a range of $1.50 to $2 per share for the current fiscal year and investors should be seeing a huge uptick in the price.
Barita reported earnings excluding one off write down of investments of $171 million or 38 cents per share in the September quarter up 140 percent over the $70 million earned in the similar period in 2015.
Barita Investments is undergoing change and this has driven up fee income sharply which is replacing interest income formerly generated form the repo business. Net interest income climbed sharply in 2016 as new business jumping to $127 million from just $44 million in the September 2015 quarter. Barita has also built up a large pool of unrealized gain on investments which can be released to profit in the future.
The other selections in the top 5 have not changed much during the week, except for a rise in the price of Key Insurance to $2.45. The junior market listings are being generally held back due to a lack of supply of shares being offered for sale.