Berger & Scotia Group drop TOP 10

Image courtesy of suphakit73/

The two main markets of the Jamaica Stock Exchange, pulled back this past week as the volatility in the price of some stocks resulted in shifts in the position of some stocks in the TOP 10. Movements were not enough to change the Junior Market list, even as Caribbean Producers saw a 25 percent fall during the week with heavy volume, the stock enjoyed partial recovery by weekend.
This week’s pull back, seems to support the comment last week, “that both markets are trading close to recent resistance levels which could act as a short term restraint on upward movement.”
In the main market, decline in the prices of Seprod down to $30 and Sterling Investments to $15.50 moved them into the top list and replaced Berger Paints and Scotia Group that maintained their prices and are now some distance from the top list.
The average PE ratio for the Junior Market Top stocks is 7.5 and 6.8 in the main market, these compare favourably with 13.7 for the main market and 13.4 for Juniors, based on 2017 estimated earnings. With several stocks trading below the average, the potential for more gains for the rest of 2017 seems positive, barring any major negative developments.
Recent TOP 10 listings remain just below the top spots with Access Financial, Jetcon Corporation, AMG Packaging, Dolphin Cove, Caribbean Cream and Blue Power sitting just below, with potential gains of more than 100 percent and in the main market, Grace Kennedy and Sagicor Group are just below the Top spots with good potential gains ahead.
The history of the Top stock performance indicates that, it takes a few months for most of the stocks to reach potential targeted prices as they tend not to be the stocks favoured by a large segment of investors, in the short term.
At the close of the week, IC’s TOP 10 Junior Market stocks now trade at an average discount of 44 percent to the Junior Market average, while those in the main market are trading at a 49 percent discount, to the average of the market, leaving several stocks with room for growth in the months ahead.
At the close of the week, bid volumes for junior market stocks remained relatively low ranging from a high of 66,436 units at $5.15 for Lasco Manufacturing with an offer of 16,685 units at $5.20, Access with a bid of 35,425 at $42.50, Caribbean Producers with 34,300 units on the bid at $3.50, with 100,000 shares on offer at $3.80. Key Insurance closed with 15,213 units on the bid at $2.90 and 51,361 offered at $3.80 and Lasco Financial ended the week with a bid of $4.05 to buy 24,000 units with 47,888 units being offered for sale at $4.40.

Seprod shares dropped from $45.10 in February to $30 on Friday.

Caribbean Cement had a bid to buy 54,903 units at $28.50 and offers of 7,850 shares at $29.95. Carreras had just 1,233 units on the bid at $77 with 4,954 shares being offered at $80, JMMB Group’s has bids to buy 8,272 units at $19.80 with an offer to sell 6,224 shares at $20, Radio Jamaica bid ended trading at $1.68 to buy 883 units with 30,000 units on offer at $1.79 while Scotia Investments closed the week with 14,753 units on the bid to buy at $36.50 and 14,049 units offered for sale at $37.85. Interest in Seprod has fallen with only 250 units on the bid at $29.50 and selling of 95,352 units at $30, this is way off from the 52 weeks’ high of $45 the stock sold at late February this year.

TOP 10 selling at steep discount

I$P hits a new high on Friday.

The IC’s TOP 10 Junior Market stocks, continue to trade at an average discount of 40 percent to the market average, while those in the main market are trading at a 50 percent discount presently.
The PE ratio of both markets are currently at an average of 12 based on this year’s estimated earnings.
During the past week ISP Finance hit a new high of $15.50 up from $12.50 at the close of the previous week to gain 24 percent for the week and 675 percent since it was listed just over a year ago, and is now out of the TOP 10. The company reported earnings of 46 cents per share for the year to December 2016 with management suggesting growth in business in the order of 30 to 40 percent for the current year, that should lift earnings sharply. Blue Power was eased out of the Top list for Juniors with Lasco Financial moving in to occupy the tenth spot, this past week. Access Finance that ended the previous week with the bid at $39, traded to end the past week at $34.25 to be back in the list.
Overall bid volumes for junior and main market stocks remain low with the only one of the Top 10 stocks with a sizeable volume on the bid for junior stocks being Key Insurance, with 172,600 units on the bid at $2.50 which is well below the last traded price of $3. Lasco Distributors is next with 37,012 units on the bid at $6.61 and a last sale of $7.30. Blue Power has 17,856 units on the bid at $35 without any stocks on offer.
In the Main market, Barita Investments has limited buying interest at the current price with just 100 units on the bid at $6.86 and just 9,200 units on the offer at $7.70, this represents quite some change form the week past when the offers were at $7, which were taken out by buyers.
Berger Paints ended with 2,500 units on the bid at $12.20 with 4,243 on offer at $12.30. Caribbean Cement’s weak demand continues in the mid-thirty dollar range, with the stock closing with only 2,340 units on the bid to buy at $31.50 while offers are at $32 to sell 53,579 units. JMMB Group’s buying is at $18.55 for 3,200 units on the bid and only 300 units offered at $18.98, Pulse Investments has offers for 245,639 units at $8 and buying at $7 for 1,000 shares while Radio Jamaica bid is at $1.60 to buy 280,761 units with 36,513 units on offer at $1.80 and Scotia Investments closed the week with 38,000 units on the bid to buy at $39.20 and 4,180 units offered at $39.40.

Big Berger gain lets in Scotia

Scotia enters IC’s TOP 10

A big 36 percent jump in the price of Berger Paints kicked it out of the main market TOP listing, allowing Scotia Group into the top list for the very first time. Berger returned to its 52 weeks high of $15 at the end of the week but had 103,511 units on offer at $15 with buying of 1,735 units at $13.01.
The top main market stocks now sell at a 50 percent discount to the average main market stocks and is lower than the discount of stocks in the junior market.
Pulse Investments gained 21 percent during the past week, to end at $8.50 and was the second largest mover in the top listing for main market stocks. Pulse has offers for 118,391 units at $8.50 and buying at $8 for 1,500 shares. Carreras earnings have been up graded with the increase in the price of cigarettes this month, following increased taxes on the product. Interest in the stock is not great currently, with 21,125 on offer at $69.50 and buying of 2,000 shares at $69.20. Radio Jamaica closed the week with 990,792 units on offer at $1.90 and buying for 5,300 units at $1.80. Barita Investments has limited buying interest at the current price with just 447 units on the bid at $6.85 and 171,830 units on the offer at $6.90. With the increased level of construction activity currently taking place in Jamaica and plans for increase construction to meet growing demand for commercial and residential units in the sector, Caribbean Cement’s weak demand continues in the mid-thirty dollar range, with the stock closing with only 2,000 units on the bid to buy at $31.50 while offers are at $32.45 to sell 24,440 units. JMMB Group weakened in the week and now sits at $17.50 but buying is on the weak side, with 5,000 units on the bid at $16.60 and only 378 units offered at $17.50.

Top 10 junior market stocks are trading at a 40 percent discount to the average of the junior market, at the close of the week, this is after Lasco Distributors fell out of the top listing and is replaced
by Lasco Financial Services that suffered a reduction in price during the week to $3.70.
During the past week ISP Finance hit a new high of $12.25 up from $11.75 at the close of the previous week, the stock still sits high on the list at number 3. Access Financial and Jetcon had a bit of price movement during the week, with both closing lower than the week before.
Price movements remained volatile during the past week, as buy and sell orders remained thin for several stocks. With little new news to come until a flood of first quarter results start to flow volatility is likely to continue for a few weeks and this could provide patient investors with some good entry points, if bids and offers are strategically placed. The sharp one week move in Berger signals that supply may not last too long before demand kicks in.

50% off sale for TOP 10 stocks

TOP 10 stocks are selling at a discount to the rest of the market of 50 percent, making them the stocks with the best appeal for investors looking for above average returns.
The best indicator that investors who want to beat the market is the be found in the TOP 10 or stocks close to them is the low valuation compared to the market average and ultimately targeted PE based on where the market is based on 2016 earnings. At the close of the week the TOP 10 average PE ratio is 7.5 well off the average market PE of 12 for the junior market while the main market TOP 10 average at 6 is just half the average market PE of 12.
Quite a number of the TOP stocks pulled back in price during the week, with just a few moving higher, one ending at a 52 weeks’ high, another hit a new high and pulled back below the previous week’s ending price.
ISP Finance hit a new high during the past week of $12 and sits just below at $11.75. In the main market Berger Paints hit a new high of $15 during the week but selling pushed it down to $11 at the end of the week
The sharp movements resulted in Dolphin Cove moving out of the TOP 10 junior market list and let in Access Financial which fell in price during the week from $43.80 to as to a recent low of $32.81. Access bounced back to close at $35.62, still low enough to push it back in the TOP 10.
The past week saw some volatility in prices similar to what occurred in the previous week as the thinness in the supply and demand for many stocks leaves prices more exposed than just a few weeks ago when demand was greater.
The 2017/18 budget was officially disclosed the week before, but had little negatively or positively for investors in the short run, longer term there may be winners with a large pool of workers having more disposable income and in the case of Carreras, the tax imposed will mean that the company will take advantage to increase prices and ensure continued growth in profits.

3 all-time highs for IC TOP 10 stocks

Berger closed at a new all-time high on Friday

The prices of several stocks listed on the Jamaica Stock Exchange underwent some sharp adjustments in the past week, and especially so on Friday, the day after government disclosed revenues measures for the 2018 fiscal year.
Nothing was disclosed to send negative signals to investors, apart from some slight increase in inflation to be caused by increased taxes on a number of items, which could be partially offset by the rise in the tax threshold for individual taxpayers. If any thing the budget sends a strong message that the next twelve months should be highly positive for investments in stocks and real estate with increased fiscal surplus that have to be generated to meet the 7 percent primary surplus, that will have some deflationary impact and lead to lower interest rates near term. While the tax on cigarettes may initially be considered negative for Carreras the increase will allow the company to garner increased revenues to cover the tax and help boost profits.
The TOP 10 junior and main market stocks saw only a few movements in and out during the past week. A number of the stocks in the list hit new highs during the week. The price of ISP Finance hit a new high of $11.50 as some supply came to the market. With limited supply and the potential for strong growth in profits the stock looks like a candidate for as split before too long. Berger Paints and Pulse Investments climbed sharply to new highs, with the former trading as high as $15 during the week but settled back at $14, up from $11.51 at the close of the previous week. Pulse Investments closed the week at $8.55 and could go higher based on the limited supply on offer at $10.
The markets continue to consolidate while awaiting early signals from 2017 first quarter results. With the TOP stocks valued well below the average of the markets’ PE ratio and at a large discount to the valuation based on 2016 earnings, around 20 times, the Top 10 stocks should continue to record gains once the bull market remains intact.
In the junior market, Dolphin Cove and Jetcon Corporation returns to the top list after exiting, at the close of the previous week and with the latter falling sharply in price to close at $11.03. The two replaced Lasco Manufacturing and AMG Packaging, two that entered in the past week. These stocks are still within striking distance for the top tier listing but market activity in the coming week could change all of that.
In the main market of the Jamaica Broilersreported strong gains in its third quarter profits and should encourage investors to bid the stock up, during the week and Berger Paints seems set to move out of the list by the close of the week and Caribbean Cream and Dolphin Cove could move out of the top list during the week.

Main Event IPO within 2 weeks

Main Ev SignWith revenues posited to be in the range of $1 billion to $1.5 billion for 2015, Main Event Entertainment should be coming to the public within two weeks subject to Financial Securities Commission effectively signing off on the prospectus.
The company is expected to raise between $100 million to $200 million at a price between $1.50 and $3.50, stockbroker for the deal, Gary Peart of Mayberry Investments told investors at a briefing today. IC Insider gathers that the amount to be raised, is likely to be $150 million, putting the PE ratio in the 10-12 range.
According to Peart, the valuation for the company is in the range of $500 million – $700 million. Between 20 to 40 percent of the shares will be offered in the IPO. Proceeds of the issue will be used to expand services particularly to Montego Bay where Solomon Sharp, Chief Executive says has a big market for his products and services. Funds will also be put into new equipment to meet increasing demand. According to Sharp, demand is such that they have had to turn away business. The additional equipment will allow for more business to be undertaken simultaneously.
Main Event Entertainment Group, a unique company that is in the business of management of event as well as producing their own production. The company provides event management, production, audio, video, lighting, staging, roofing, power supply, digital signage and management, concept development, creative development, infrastructural build-outs.

Three of the company's directors

Three of the company’s directors

The company generates revenues from Digital boards spread across 22 countries in the Caribbean some a few Central American countries mostly for screens in Digicel stores with more than 100 screens for which they generate up US$225 for month for maintaining and updating them. They also supply and service menu boards for other entities with the latest to sign on being Wendy’s on board, the company provide outdoor signage in the form of advertising billboards.
The principals include Solomon Sharpe, CEO and formerly of Desnoes and Geddes, Richard Bair, Chief Operating Officer, formerly employed at Porter Brothers and Donna Waithe, Director HR and Administration with 23 years of experience in the aviation sector at Air Jamaica. The company was established 2004 and employs between 51 and 200 full time and part time employees.
The Board of directors include Hugh Graham, Solomon Sharpe, Donna Waithe, Richard Bair, Tania Waldron-Gooden, Harriat Maragh, chairman and Dr. Ian Blair.
The company have as its clients many blue chip Jamaican companies, including Scotia Group, National Commercial Bank, Flow, Desnoes and Geddes to name a few.

Key Insurance in at top of TOP 5

Key Insurance listing ceremony.

Key Insurance listing ceremony.

Key Insurance climbed into the Top 5 of the IC Insider’ junior market list, at the number one spot. The rise came about as a result of a turnaround in the company’s September quarterly results, to overcome a drag the losses reported in the June had on the profit and the stock price.
IC Insider’s forecast is for earnings per share of approximately 35 cents for 2016, for Key, suggesting the potential for a big rise in the stock price. It is noted that the only offer for the stock is 34,688 at $3.50 with the highest bid at $2.15 to buy 40,700 shares.
Jetcon Corporation has fallen out of the Top five due to a combination of a rise in Jetcon’s price, following strong third quarter results and the ascension of Key Insurance to the list. Access Financial that has been in the TOP 5 for a long time also reported strong increased profit, with a hike of 95 percent for the September quarter and a 60 percent rise to $353 million for the six months to September.
Barita could be the star performer from the TOP 5 main market stocks as demand has come in for the stock, while supply has declined.IC Top 5 18-11-16 While the investment bank reported 54 cents per share for the full year to September, earnings from ongoing operations is more like 65 cents per share. Most importantly, the information that says the stock is an outstanding buy candidate, is the quality of the final quarter results, with strong growth in fee income and net interest income and less reliance on investment and foreign exchange gains. The final quarter results, suggest earnings should end up around $1.50 in 2017. JMMB Group came in with big increased earnings, one off gains may have played a big role in the big increase but even without that, the stock is undervalued with earnings from ongoing operations in the $2 range.

Mayberry’s latest stock picks

MILMayberry Investments released their most recent recommendations for 6 Jamaica Stock Exchange listed stocks that they say are BUYS and their closing prices for 19th November.
The stocks selected are considered undervalued by Mayberry and are shown with earnings and PE ratios and comprise:• JMMB Group: $13.91 per share – P/E ratio 7.31 • Jetcon Corporation: $4.97 per share – P/E ratio 12.18 • Jamaican Teas: $4.10 per share – P/E ratio 10.73 • Sterling Investments: $15.50 per share – P/E ratio 8.34 • General Accident Insurance: $3.06 per share – P/E ratio 6.20 • Pulse Investments: $3.90 per share – P/E ratio 4.21
Mayberry indicates, that recent stock splits provide additional buying opportunities as stocks are more liquid and list the following as the candidates to benefit from stock splits.
Paramount Trading, Jamaica Stock Exchange, Cargo Handlers, EPPLEY Limited that will split the it’s $735 priced stock into 150 units, to take effect from the opening of trading on Thursday, December 1.
The Mayberry report also states that company developments that are positive, include the granting of commercial banking licence for the JMMB Group, Initial Public Offerings (IPO’s) to come within the next 3 months that will provide opportunities for new Investments as well as expansion plans at Honey Buns and National Commercial Bank’s record profits.

JMMB is one of 6 stocks identified by Mayberry as BUYS.

JMMB is one of 6 stocks identified by Mayberry as BUYS.

IC Insider’s view the top six selection a good choice, with some listed in IC Insider’s TOP 5 selection. the Mayberry’s selection seems to focus on historical or trailing earnings and could result in missed opportunities for investors. Jetcon’s PE is put at 12.18 which may be consider relatively high, suggesting that full year earnings would be 40 cents per share. Nine months earnings before tax is at that level, hence the PE seems overstated. Jamaican Teas earnings from continuing operations is 44 cents, with the stock priced at $4.10 the PE is around 9 and Pulse appears lowly valued but may require a lot of convincing of the market that that is the case, with a lot of its profit coming from real estate valuation gains and bartering arrangements.
Stock splits, create more liquidity in the stocks of companies that undertake them. Investors in the Jamaican market have driven most of the stocks that have split to full valuation and pushed the vast majority to be amongst the highest valued on the market.

Paramount in Top 5 stocks to avoid

Paramount Trading is selling at a PE of 17 & is now in the TOP stocks to avoid for now.

Paramount Trading is selling at a PE of 17 & is now in the TOP stocks to avoid for now.

In a market that has stocks selling well below those with the highest valuation currently, based on 2016 earnings, investors should be focusing on stocks with lower valuations and avoid for now, the more pricy ones.
In certain cases it is not that some of the highest valued stocks will not perform well going forward. This may not be the time to buy them, as they are likely to underperform the overall market. A look at the performance of the TOP 5, reflects the situation very well.
Paramount Trading that has now entered the list to avoid, is the sole change, with Key Insurance moving out with recovery in profits in the September quarter. Paramount is the IC Insider’s TOP 5 best performer, rising with a gain of 181 percent since it entered the TOP list in September. Others to score big are, Access Financial Services with gains of 63 percent, Derrimon Trading up 58 percent, General Accident 50 percent followed by Jetcon with gains of 49 percent. Top 5 to avd 18-11-16In the main market Barita Investments is up 45 percent JMMB Group is up 38 percent and National Commercial Bank rose 27 percent. The stocks in the list to avoid have hardly moved in contrast to the TOP 5 selections with the best gain being 38 percent with the next best being Kingston Wharves with 7 percent.
With expansion plans, Honey Bun and Paramount could enjoy a good 2017, the stocks of the companies may take some time to really pay off, if bought now. With Honey Bun into its new fiscal year, first quarter results due by February 2017, could be strong and therefore be a fuel for higher price. Investors should keep their eyes on 2017 as the current year winds to a close and next year having much opportunities for profitable investment, and what may appear pricey now could be attractive in 2017 as companies enjoy more growth.

Quick about turn at Key Insurance

Natalia Gobin-Gunter Chairman and Deputy Managing director inserting name strip to indicate listing of Key Insurance on the junior market.

Natalia Gobin-Gunter Chairman and Deputy Managing director inserting name strip to indicate listing of Key Insurance on the junior market.

Key Insurance recovered from a loss of $21 million in the June quarter to a profit of $84 million in the September quarter, up from a loss of $284,000 in the 2015 third quarter and also reversed the loss in the six months to June this year of $18 million.
The second quarter was negatively affected by an Insurance claims of $747 million compared to just $82 million in 2015 for the same period. In the September quarter the insurance company benefited from a positive turn around for claims.
The claims experience in the second quarter forced the company’s management to review the insurance claims and reserves quarterly rather than annually in the past. The end result is that claims seem to be back to normal in the third quarter with a net recovery in claims of $228 million as opposed to an expense of $193 million expensed in 2015.
Nine months profit ended at $66 million compared to $68 million for the 2015 period and seems set to reach $120 million for the full year, for earnings per share of 35 cents. At this level of earnings, the stock has a PE of 6, the lowest in the junior market.
Key generated net premium income of $166 million up 25 percent over 2015 and $451 million for the nine months, an increase of 28.5 percent. Administrative expenses rose from $77 million in the 2015 third quarter to $100 million in 2016 and for the nine months to $281 million from $220 million.
The stock last traded at $2 on the junior market of the Jamaica Stock Exchange.