Junior Market at record high

The Junior Market is trading at record high at the start of Monday trading at 3,700.02 points after surging 114.27 points and exceeding the record close of 3,662.94 points on August 14, 2019.

New record high for the JSE Junior Market.

The JSE Main market All Jamaican Composite Index jumped 3,232.66 points to trade at 442,490.38 within 25 minutes of the opening.
In trading Access Financial Services is up by $1 to $26, Caribbean Insurance Brokers rose 24 cents $2.90, Dolphin Cove gained to $1 to $23, Fosrich was up 21 cents to $14.44, Fontana gained 33 cents to $8, Lasco Distributors rose 12 cents to $3.25, Lasco Financial is up 21 cents to $3.27 followed by Lasco Manufacturing is up 38 cents to $4.98. Main Event rose 50 cents to $4.50, Paramount Trading rose 21 cents to $1.62 and SSL Venture Capital rose 41 cents to $1.69 following news of a proposed acquisition of 79 percent of the company’s shares.
In the Main Market, Caribbean Producers rose 61 cents to a new high of $16.50 and NCB Financial put on $2.13 to $130.
The Junior Market rise conforms to ICIsider.com report that the market was poised to make a big break from the consolidation around the 3,300 points mark and head to over 4,000 points.

JSE starts New Year with a bullish tone

Investors kept up the bullish stance in trading on the Jamaica Stock Exchange on the first trading day of the year with the All Jamaican Composite Index surging 8,895.04 points to 447,223.41, up from 438,328.37 at the close on Friday, with the Junior Market index(AJI) rising 45.88 points to 3474.18 from 3,428.30 on Friday.
By 10 am, the AJI had slipped down to 445,676.67 and the Junior Market index pulled back to 3,470.99.
On the Junior Market, Dolphin Cove jumped from $15 on Friday to $16.90 after trading 77,539 shares, Cargo Handlers dropped from $8.25 on Friday to $7.01 and MailPac fell from $3.78 to $3.50 and In the Main Market, NCB Financial fell from the last sale price of $128.70 to $125.

Carib Producers Top stock of the year & Juniors up 30%

The Jamaica Stock Exchange Junior Market closed out 2021 with the market Index climbing 29.7 percent to settle at 3,428.30 points while the JSE Main Market index rose a mere one percent to end at 396155.61 points, the JSE USD market closed at 195.51 points for a yearly gain of just 4.99 percent.

Caribbean Producers gained 364% in 2021.

The Junior Market had 32 winners and nine losers, with 2021 newly list Future Energy Source, rising a substantial 266 percent, Fosrich was up 155 percent with rising profit, Jamaica Teas that had a gallant year helped by its investment arm posting positive results and helping to post increased profits for the year and Lumber Depot, with improved results for the year, both companies had a 99 percent rally, followed by ISP Finance up 95 percent.
The JSE main market had 24 stocks rising between one percent and a high of 364 percent. Caribbean Producers was switched from the Junior Market in July this year to the Min Market with the price under $5 and ended the year as the best performing stock in the overall market with a towering gain of 364 percent with the price closing at $13. Had the switch not taken place the Junior Market would have recorded greater gains than it did. Ciboney rose 221 percent as investors speculated heavily on it and Salada Foods jumped 117 percent, with the bulk of the increase coming as a result of a misunderstanding about the stock value. The price is likely to suffer a sharp correction in 2022.

Eppley Property gained 68 percent followed by Radio Jamaica with a 61 percent rise following big gains in profit for the half year that ended in September, this year and GraceKennedy rose 58 percent helped by continued growth in profit.
The average gain for the Junior Market stocks were 48 percent from 32 companies and a total of nine stocks lost an average of 16 percent in the Junior Market with the highest loss being 45 percent clocked up by CAC 2000.
The average gain for the Main Market stocks was 52 percent from 22 stocks and a total of 21 stocks lost an average of 15 percent in the Main Market with the highest loss being 33 percent clocked up by 1834 Investments and Wigton Windfarm.

Abolish the useless circuit breaker rule

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Trading was halted in five Junior Market stocks this morning as a result of the stock exchange circuit breaker although, all are halted at prices they frequently traded at in recent weeks.
Caribbean Assurance  Brokers was frozen at $2.95, the stock traded at that price on Monday, Consolidated Bakeries was frozen at $1.53, iCreate is frozen as the price dropped to 75 cents, Jetcon Corporation freeze took place at $1.08 and KLE Group at $2.30 from $3.10 on Monday but it traded as low as $2 on the 25th of the month. None of the stocks traded outside the recent range, so what is the Stock Exchange preventing these stocks and many others from trading freely as there is no information that is not already known to the market.
Leaders are supposed to lead as such when things they control is no longer meaningful, they should adjust them, the leaders at the helm of the Jamaica Stock Exchange don’t seem to get it.
Stock exchanges are markets that allow companies to raise capital and owners of shares to give a reasonable view that if they want to sell their stock there is an organised market to do so. Today’s modern stock markets are listed companies and the frequency of trading allows them to make money.
Some years ago, in response to the global market sharp decline, several stock exchanges put in place a circuit breaker rule that resulted in a halt to trading if a stock or the market moved too fast in a session. The JSE put one in place and modified it a few years ago. The rule has not done anything to protect investors since its introduction. In fact, it made investors worse off as they are prevented for traded stocks during the hour of halting of trading that takes place.

An indispensable tool for all investors

The PE ratio is one of the most popular and valuable tools used by investors to assess the value of a stock, allowing them to make appropriate investment decisions. Every investor should understand this simple measure. If they do, they will make better investment decisions, but not all PE ratios are equal and the differences should be noted when using them to make investment decisions.
“The PE Ratio is a measure used in computing appropriate stock values, averages 16 based on ICInsider.com’s forecast of 2021-22 earnings.”  Readers of ICInsider.com’s daily Jamaican stock market reports will be familiar with the above quote.
What is the reason to quote this daily? PEs help investors determine if they value stocks appropriately by comparing the value of one stock against another and the overall market value.
The PE ratio is the number of years it takes for investors to get back their money based on the profit made by a company, ignoring growth in profits. At the close of trading on Wednesday, Main Market stocks were trading at an average of around 15.8, which is equal to the amount of money invested in each stock that would be repaid within 15.8 years based on this year’s profit and assuming the profit would be constant for the next 15.8 years.
On the surface, stocks with high PE ratios take longer to deliver returns than those with lower PEs, all things being equal. Globally, stocks with high PEs have high growth rates, resulting in a higher level of an annual increase in profit than stocks with lower PEs. The rationale is that if profits are going fast, the accumulated gains will reduce the payback period.
Investors can find the PE ratio for each stock on the daily report of Jamaica Stock Exchange stocks quotation charts included in the markets’ reports. The charts carry projected earnings for each company and the PE ratio for each stock, based on ICInsider.com computations. From these charts, investors can easily see the stocks that are expensive and those that are not. A company with profits growing at 10 percent per annum will have profit doubling in 7.2 years. A company that has profits growing at 20 percent per annum will double its earnings in 3.6 years, which should carry a higher PE ratio than the former.
Don’t follow the crowd. Pay attention to facts, not fads. The general rule; buy stocks with low PEs and stay away from those with high PEs and monitor them regularly to see if there are significant changes that may warrant changes in an investment.
While many investors get attracted to cheaper priced stocks believing they can double easier than high priced ones, they often ignore the main feature that determines cheapness and, therefore, the ability to make more profitable trades.
A significant and most crucial issue is the makeup of the profits used in computing the PEs, are they based on earnings from continuing operations or not? Not all PEs are equal and investors need to find out periods used to calculate the PE ratio and the quality of earnings used in the composition. PEs may be based on historical profits, trailing four quarters, current year’s or based on future earnings. Why is this important? Many companies have onetime income or expenses that are not likely to repeat consistently in the future. In such cases, it is vital to strip earnings of the onetime items to determine earnings from continuing operations. If reported profits are not adjusted for these items, the stock may be considered undervalued or overvalued and lead investors and lead to wrong investment decisions.
The usual procedure is to buy when PE are low and sell when high. Patience is required as stocks tend to take time to fully valuation, especially when they have fallen out of favour.

Can the JSE say who is Marcus Jeffrey La Rode?

The Jamaica Stock Exchange has some questions to answer and some serious work to do, based on information gleaned by ICinsider.com. Who is MARCUS JEFFREY LA RODE, with an address of LUM TACK HILL who is said to be the Holder of account starting with TTCD etc.?

The Jamaica Stock Exchange subsidiary

Why is this name appearing on a legitimate account that does not belong to the name now appearing on the investments account statement, and is the JSE aware of such developments in its system resulting in a name change? The other question is, what is the system in place to ensure that investors’ accounts are not tampered with and if that were to happen, what is the procedure to detect same and correct it. The JSCD has stopped sending statements to investors, while this publication understands that the FSC requires brokers to send out periodic statements of accounts to their clients.

Carib Cement at $147

Jamaica’s sole cement producer Caribbean Cement hit a record high of $147.12 in today’s early trading and was suspended after the JSE circuit breaker was triggered. The stock, which closed on Thursday at $112, has risen 31 percent for the day.
Barita Investments closed yesterday at $108.09  and is down to $102.30 after trading 298,424 units. Also on the move is QWI Investments that traded up to 90 cents after the block of 23 million shares on offer were removed.
There are only four offers for cement on the board, with the lowest at $147; the bids are not strong with all at $105 or below but for a small amount of 99 units at $146.12.
The markets are up in early trading on the first day of October, with the All Jamaican Composite Index now at 460,323.71, up from 456,691.93 at the close of September. The Junior Market Index is at 3,316.21, up from 3,296.35 on Thursday. Jamaican Teas shares that were in strong demand on Thursday traded at $4.50 after 1.68 million shares were traded.

The big winners from tourism rebound

Jamaica tourism arrival numbers are approaching 80 percent of the 2019 figures. That is good news for the country, workers in the industry, and businesses close to the hotel areas and has major implications for listed companies.  

Caribbean Producers back in TOP 10

Recent data of inward bound passengers through the country’s international airports suggest that tourist arrivals for 2021 will be robust and at levels that far surpass that of 2020. Not only will the numbers exceed that of 2020, but the most lucrative period of December to April when visitor arrival numbers are some of the best monthly patronages, but the rates paid to visit are at the highest for the year.
The rebound means more revenues for the government, more foreign exchange earnings for the country, more wages paid to workers and more income for persons and companies providing goods and services to the sector.
The big winners for listed companies are Caribbean Producers, a major supplier of goods to sector in Jamaica and St Lucia. Everything Fresh is also a significant supplier to the sector in Jamaica and should see a rise in sales, Express Catering generates all its income from the industry, with its locations within the Sangster International Airport and Dolphin Cove with its attractions being a big draw for tourists.

Dolphin Cove

Others to benefit to a lesser degree are GraceKennedy, Wisynco, Jamaica Broilers, Knutsford Express and Fontana, the latter, with stores in Ocho Rios and Montego that sell to the visitors.
The rebound has significant implications for the foreign exchange market in 2022. In 2019, the tourism sector earned around $3 billion and just $1 billion in 2020. A return to 2019 visitor arrival number should see another $2 billion gross generated by the country than for 2020 and 2021, along with the billion increase in remittances since 2019 if maintained into 2022, should result in one of the most buoyant foreign exchange environment for the county.

Wigton price collapses

Wigton Windfarms’ shares traded below the IPO price of 50 cents on Friday as attempts to shield the price from falling after announcing a drop in revenues is finally giving way to selling pressure. The Wigton syndrome continues to plaque the Jamaica Stock market with irrational behavior of investors to be seen in the prices of many stocks.

Wigton closed at anew high of $1

Wigton traded nearly 90% of shares on Thursday.

On August 25, investors bought 5 million shares of Future Energy, up to $2.85 and for the next two trading day’s they just over 10 million units up to $3.29, with 15 million shares trading on the 30th at an average of $2.96. The stock is now trading at $2.04, with a PE ratio of 16, to be one of the more highly priced Junior Market stocks. What is happening here, when viewed against stocks with much lower PEs and good growth prospects?
Radio Jamaica another stock that traded as high as $4.65 on August 25, traded on Friday at $3.11 at a PE ratio of 7. Salada Foods continues to trade around the $7 region at a PE ratio of 43 times current year’s earnings. Wigton Windfarms that investors were not informed until late last year that the contract for their number 2 turbine provide for a reduction in rates for the supplying of electricity to JPS, belatedly traded down to 46 cents on Friday with few bids left in the system, and now trades at a PE of 12.5.
The stock market is a wonderful creation that has helped to enrich participants over the years, like any endeavor the more time spent studying and understanding it the better off those investors will be.
There are thousands of new investors in the market brought on by several new listings on the market, with most listings creating good returns in a relatively short time for early investors.
In the past, investors and scholars developed systems and methods to act as a guide to better investment decisions and thus reduce the love or dislike for a stock or other types of investments and thus reduce emotional decisions.
Technical analysis is a very useful tool used in the investment arena that carries coded messages for persons who understand them. They help investors to avoid excessive behavior in markets and telegraph future trends by using past market movements as the base.
The recent price movements for Radio Jamaica and Fesco show them breaking out of a channel that goes back for months, both companies released results that were price movers and both broke out, with the market not fully there as yet as prices moved too far too fast as such prices pulled back.
A few months after Wigton shares were listed in 2019, ICINsider.com wrote a piece to help investors better understand stock market behavior and prevent losses in the market. The piece captioned “Wigton price dreamers” was published in May of 2019. In light of the irrational trading in Fesco and Salada shares, elements of the article are highlighted below.

Salada Foods traded at a all-time high of $18 on Tuesday.

“Buy now, Ride the $3 wave”. That is the advice of one online investor to another, regarding the likely performance of the Wigton Windfarm stock after trading, on the first day of listing at 83 cents with a PE of 14, placing the value in the upper half of the most valued main market stocks. The premium over net asset value another measure of valuation is 291 percent above the net asset value. At $3, the stock would trade at a stunningly high PE ratio of 50 times 2019 and 2020 earnings. The only main market stock close to that valuation is Kingston Wharves (KW) at 35 times 2019 earnings and that is coming down from more than 50 times 2018 earnings when it traded at $85.
Unlike KW, which has less than 10 percent of the shareholding that will trade, amounting to a few million units, Wigton has billion of shares that will trade. The high liquidity of the shares almost ensures that they will not become overvalued.
Most investors who would be big buyers are more professional and are versed in the valuation levels of stocks. Accordingly, they are unlikely to be buying a stock that has doubtful expansion credentials at an inflated value. The most popular valuation tool, the PE ratio does not support a price much higher than $1.20, with EPS of 60 cents per share. A price of $1.20 equates to a high PE ratio of 20. Only a few stocks are valued close to this multiple and many of them have prospects for profits to grow. Wigton has no immediate prospects for growth in earnings, pricing it at 20 times EPS would therefore be unwise. The market will speak but the heavy selling on Friday when it first traded is more in line with the thinking that the top is not far off. Investors who buy shares above the accepted market norm will likely get crushed.
In the investment world staying close to the crowd with pricing is a prudent investment practice that tends to be less costly than trying to predict lofty heights for stocks to reach.
PE ratios are there to give a sense of appropriate values, when investors try to break away from where the bulk of investors place a value of a stock, they usually end up regret the move.

Junior Market 64 points tumble

The Jamaica Stock Exchange Junior Market suffered a big reversal in the market index, pushing it down 64 points in early trading to 3,223.96 from the close on Tuesday at 3,287.50, with the fall of Express Catering from $5 close Tuesday to $3.65 this morning that led to an automatic freeze in the stock at 9.35 am.
At 10:30 am, the junior market index moved up to 3,235.59 points. Medical Disposables rose from $4.70 at the close on Tuesday to $5.25 as investors responded positively to 10 cents per share earnings in the June quarter versus a loss in 2020. The All Jamaican Composite Index trades at 458,039.67, up from 457,385.71 at the close on Tuesday. Guardian Holdings fell to $615 during the trading session, the lowest pointy since listing this year.