For the past week, activity in the Jamaican stock market was mostly stable following the Barita Investments and Tropical Battery successful public offers. Buying interest increased for Caribbean Flavours and Jamaican Teas stocks, both with pending stock splits.
Caribbean Flavours a Derrimon’s subsidiary
This week’s focus: Caribbean Flavours (CFF), a former IC TOP 10 listed stock, ten for one stock split becomes effective Tuesday. This stock is worth watching this week. After the split, the company will have just under one billion shares issued. Many investors foolishly position themselves to buy stocks after the split at a higher value than before. It is almost a certainty that the price of CFF will move higher after Tuesday’s split. The company reported a 42 percent rise in second-quarter revenues and an increased profit of 25 percent, with profit for the half-year up by 23 percent. The forecast for earnings per share is $1.15 for 2020 and $1.75 in 2021. The PE ratio at the current price of $19.65 the stock traded at on the Junior Market on Friday is 17 times the 2020 earnings and 11 times 2021 earnings.
For a fifth consecutive week, there were no changes in the companies on the IC TOP 10 listings, but that could change with some results set for release during the week. 
The markets moved moderately higher to close at their highest levels since mid-August for the. The Main Market closed the past week higher than the previous one, but the Junior Market closed the week lower than the prior one.
The top three stocks in each market saw no change in ranking, leaving the top three Junior Market stocks, with the potential to gain between 281 to 726 percent by March 2021. Caribbean Producers heads the list, followed by Lasco Financial and Elite Diagnostic. The focus on all three is on the 2021 fiscal year profit, projected to recover from reduced profit for the 2020 financial year. 
With expected gains of 152 to 240 percent, the top three Main Market stocks are Berger Paints, followed by JMMB Group and Carreras. Radio Jamaica is now down to the fifth spot with slightly lower earnings per share of 15 cents from 20 cents previously.
The local stock market’s targeted average PE ratio is 20 based on companies’ profits reporting full year’s results, from now to the second quarter in 2021. Both the Junior and Main markets are currently trading well below this level, indicating the potential gains. The JSE Main Market ended the week, with an overall PE of 15.4 and the Junior Market 11.3, based on IC Insider.com’s projected 2020-21 earnings. The average PE ratio of the Junior Market has been slowly rising, with better profit opportunities than the Main Market and narrowing the gap. The PE ratio for the Junior Market Top 10 stocks average a mere 6.1 at just 54 percent to the overall Junior Market average. The Main Market TOP 10 stocks trade at a PE of 8.4 or 55 percent of the PE of the overall market.
The average projected gain for the Junior Market IC TOP 10 stocks is 279 percent and 145 percent for the JSE Main Market, based on 2020-21 earnings, an indication of potentially greater gains in the Junior Market than in the Main Market.
IC TOP 10 stocks are likely to deliver the best returns up to March 2021 and ranked in order of potential gains, based on likely gain for each company, taking into account the earnings and PE ratios for the current fiscal year. Expected values will change as stock prices fluctuate and result in the selection process in and out of the lists for most weeks. Revisions to earnings per share are ongoing, based on receipt of new information.
Persons who compiled this report may have an interest in securities commented on in this report.
