Profit results could ignite market

There is little doubt that the summer rally is on for Jamaica stocks and is being helped by some good results for a number of the companies. Release of results over the next two days could be a huge catalyst for the market in the days ahead.
Last week a number of stocks traded at 52 weeks’ highs or historical highs. Profit results are expected to flood the market over the next two days and could have a big impact on prices.
Last week a number of on the Watch list traded at record high levels and more of that is expected this week.
Stocks with scarce supplies and could spring surprises include Grace Kennedy, NCB Financial, Berger Paints, Caribbean Cement, Kingston Wharves, PanJam Investment, Sagicor Group, Salada Foods, Seprod and Scotia Group. The main market is not the only segment with limited supplies. The Junior Market supplies continue to be limited for many of the listings. The list includes, Blue Power, Caribbean Flavours, Cargo Handlers, Caribbean Producers, Derrimon Trading, Express Catering, General Accident,Caribbean Cream, Medical Disposables and Stationery and Office Supplies.
The main market continues to be steered higher by an upward sloping support line as well the 45 and 125 day moving averages, lending support just below the index and the Junior Market that is at a 9 months’ high, is being steered by an upward rising long-term support line and the start of a golden cross. The golden cross is a very bullish long-term signal.

Grace set to make big price leap

Grace Kennedy traded at a 52 weeks’ high on JSE on Friday..

The Jamaica stock market is at an interesting stage, with supply of many stocks offered for sale, getting more scarce by the day, while interest rates are at their lowest levels in Jamaica’s history but are most are valued  at levels when interest rates were in the teens.
The main market has gained 8,387.30 points in July, and is now a record high as of Friday with gains of 9,486.57 since the start of July, thus mirroring the start of the usual summer rally on the Jamaica Stock Exchange, while the Junior Market continues to bounce and is now at a 9 months’ high.
Liquidity is very high and forcing interest rates lower as investors try to place funds on hands. As liquidity rise in the market supply of stocks is on the decline. Some of stock with scarce supplies include Grace Kennedy that has just one offer priced at $80 when the market closed on Friday, NCB Financial that is now trading over $100 is not far behind with limited offers. It has been years that the supply of Grace stock has been this low and suggest a big upward price move.

The All Jamaica Composite index now braking out of a narrow upward sloping channel going back to November 2017.

Berger Paints, Caribbean Cement, JMMB Group, Kingston Wharves, PanJam Investment, Sagicor Group, Seprod and Scotia Group with only 362,000 units on offer are amongst some that have very limited supplies being offered for sale on the market. But the main market is not the only segment with limited supplies.Over in the Junior market where demand is not as great as in 2017, supplies are limited for many of the listings. The list includes, Blue Power, Caribbean Flavours, Cargo Handlers, Derrimon Trading, Express Catering, Caribbean Cream, Medical Disposables and Stationery and Office Supplies. Caribbean Producers closed trading at $5.80 at the end of the previous week and ended this past week at $6.22 and may well go higher this coming week as it closed with a bid at $6.20. A number of these stocks could lead the break out of the markets in a big way when investors on a whole come to the realization that with interest rates now below 2 percent,

Medical Disposables profit jumps 49 percent before foreign exchange loss in Q1.

that the old accepted PE ratio of 10 being reasonable to value stocks, is no longer accepted and that ratios of 20 to 30 will become the norm going forward. Investors only need to look at stocks in in Trinidad and Tobago where PEs have been in the 20 level for years to understand where we will be heading in the not too distant future.
The main market continues to be steered higher by an upward sloping support line as well the 45 and 125 day moving averages, lending support just below the index and the Junior Market that is at a 9 month high, is being steered by an upward rising long term support line and the start of a golden cross.

Stocks to Watch this week

The main market pulled back on but blasted to a new intraday high on Friday confirming that the bull run is in its early stages, while the Junior Market continues to bounce around.
The main market has gained nearly 3,600 points for July, thus mirroring the start of the usual summer rally on the Jamaica Stock Exchange.
The main market is being steered higher by an upward sloping support line as well the 45 and 125 day moving averages, lending support just below the index and the Junior Market is being steered by an upward rising long term support line and the start of a golden cross.
The market saw many developments that confirm that a bull market is in place with all three initial public offers closing ahead of the scheduled close.
The past week saw a few strong results being posted and more are expected this week that should include NCB Financial and Proven Investments. Barita Investments got the offer to buy 75% of the shares at $9.20 each. IC Insider.com is of the view that the stock is worth much more with good prospects to build on the strong foundation that it has. Jamaican Stock Exchange released strong gains in profit and announced a dividend as well, and could benefit from both, with eyes focused on even greater improvement in 2019. Caribbean Cement stock is another to watch, with the annual general meeting on this week and results for the June quarter due. Margaritaville had a bid of 16.9 cents versus a last sale of 15 cents and is being offered at 18 cents to sell 43,795 units, Proven Investments had a bid of 16 cents versus a last sale of 15 cents and is being offered at 18.5 cents to sell 1,050 units.
Medical Disposables came in for strong demand in the past week with the price going as high as $5.50. Trading during the week removed supplies that was overhanging the market leaving little supply at the end of the week and could go higher in the coming week. Caribbean Cream after posting a 59 percent increase in profit for the 2019 first quarter saw no more continuation of the demand that lifted the price into the $6 region but could well make some increased interest this week.

Stocks to Watch this week

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Caribbean Cream’s Kremi product

There are clear signs that the usual summer rally has started on the Jamaica Stock Exchange, with the main market hitting new highs on all five trading days during the past week, and ending at record closing highs on all, except on Friday.
The main market entered record territory, minutes after opening on Friday with the All Jamaican Composite Index climbing 1,082.40 points to an intraday record of 340,315.50 and the JSE Index rising 986.19 points to a record 310,065.85. The market is being steered higher by an upward sloping support line as well the 45 and 125 day moving averages, lending support just below the index for the main market and the Junior Market is being steered by an upward rising long term support line.
The market saw many developments that confirm that a bull market is in place. Mayberry Jamaican Equities initial public offer, opened and closed on Monday, having been oversubscribed and Indies Pharma public offer opened on Thursday and closed on Friday but Stanley Motta remains opened after more than a week since the offer opened.
Elsewhere in the secondary market, Jamaica Broilers traded briefly at a record high of $33, others trading at 52 weeks’ high in the main market are Kingston Wharves trading at $52.03, PanJam Investment at $58.99 and Pulse Investments trading up to $3.50, but 138 Student Living, having fallen to a 52 weeks’ low of $4.40 the previous week fell even lower in this past week to $3.85,
Former TOP 10 Junior Market listing, Derrimon Trading ordinary share, hit at an all-time high of $23 during the week. Current TOP 10 listing, CAC2000 hit a new record high of $10 as well as C2W Music climbed to $1.60, while recently listed Everything Fresh traded at an all-time low of $1.95 since listing in June. US dollar market listings, Margaritaville and Proven Investments both traded at a 52 weeks’ lows during the week as investors seem to lose interest in the US dollar listed shares.
The main market is exhibiting strong bullish signals while the Junior Market seems more subdued apparently waiting on the release of results.

Stationery & Office Supplies new book making operation.

Against this back drop there could be some interesting developments in in the market in the coming days. Based on demand and supply of stocks and trading activities last week the stocks worth watching this week include, Caribbean Cream that jumped sharply on Friday after the company reported improve first quarter results, NCB Financial pulled back in the past week but may be constrained by the $100 mark until the group reports third quarter results by month end. PanJam Investment could move higher again, as there continues to be buying but there is very limited supply of the stock on offer. Radio Jamaica that came for increased buying recently seems to be seeing supplies coming to market at $1.20 or higher and could get more attention as the weeks roll on. Others worth watching include Caribbean Cement, Berger Paints with little selling, Grace Kennedy for which there is also limited supply. In the Junior market, some demand exists for Derrimon Trading, with a resolution to be voted on at the upcoming AGM to split each share into 10 units, but the price may be stuck around the $20-23 range with the PE more than 20 times 2018 earnings compared to the market average of 11.4. Stationery and Office Supplies continues to trade around the $8 mark, with limited supply on offer, the stock is worth watching but may require second quarter results to kick the price to another level. With the directors stating that they have discussed the possibility of a stock split in the past, the stock can be expected to be one to see a split probably by the next AGM, investors should be stock piling this one with the price being undervalued. Jamaican Teas pulled back in the past week from $5.50 to $5 this week, but with limited stocks being offered for sale, is worth watching. Wisynco seems to have found support just above $9 and is one to watch over the next few weeks as the release of full year result nears, the Jamaican Stock Exchange is another to be watched along with JMMB Group and Seprod.

Record run for IC TOP stocks

Kingsley Cooper Chairman of Pulse that gained 67% during the past week.

Pulse Investments, in the main market TOP 10, up to the week starting June 25, jumped 67 percent this past week, to close at $3. Current listings, Caribbean Cement traded at $45 and Grace Kennedy at $56 both at 52 weeks’ highs during the week.
Former listing, Derrimon Trading ordinary share traded at an all-time high of $20.50 during the week while, the preference share traded at $2.45 for at a new high. The week closed out with 138 Student Living, falling to a 52 weeks’ low of $4.40 but C2W Music climbed to a 52 weeks’ high of $1.30 as the main market moved within just 300 points of the record high reached on June 13, while the Junior Market traded at the highest level during the week, since December last year.
There is just one change to the TOP 10 listings at the end of the week, with Stationery and Office Supplies that just slipped off the Junior Market list at the end of the previous week returning after Caribbean Producers that dethroned it in the previous week was squeezed it out, as Carib Producers rose to $5.50 from $5.10 at the end of the previous week.
With the average PE ratio for Junior Market Top stocks at 6.2 compared to an average PE for the overall market of 11, based on 2018 estimated earnings and the main market PE at 7.9 for the top stocks, compared to a market average of 13, suggest that the rest of the year should deliver better returns than the first half. A look back on the markets shows that they made noticeable rise in August last year, a pattern that goes back several years and could well do so again.
The sharp reduction in Bank of Jamaica policy rate to an unprecedented 2 percent and Treasury bill interest rates to record lows of 2.5 percent, is set to push stocks values much higher unless profits for most of the listed companies decline. The shortage of supply of many listings continues and is set to result in a big rise in prices going forward before supplies will be able to satisfy what is likely to be a rising demand.
Last week prospectuses for Stanley Motta and Mayberry Jamaican Equities were published and this week Indies Pharma is released. The first two are not priced to bounce based on the underlying nature of these companies. Stanley Motta is a real estate play that will provide income that is better than most fixed interest securities with moderate capital appreciation going forward, while Mayberry Jamaican Equities is a closed end mutual fund, growth is going to depend of appreciation in the investments held or to be acquired. Indies Pharma, with IC Insider.com preliminary earnings estimate for 2018 of 16 cents per share, could get a bounce sometime after listing and could reach $2.40. The stock sits in the mid-range of IC Insider.com’s ranking of Junior Market stocks with a PE of 10 just a bit less than the average of 11 for the market but most IPOs have traded around 15 times the current year’s earnings.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 45 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 39 percent to the market.
Stocks to Watch The stocks to watch this week include, NCB Financial. PanJam Investment could move higher again, as there continues to be buying but there is very limited supply of the stock on offer. Radio Jamaica that came for increased buying recently seems to be seeing supplies coming to market at $1.20 or higher and could get more attention with the network broadcasting the popular world cup matches as adverting revenues should climb from the coverage. Others worth watching include Caribbean Cement, Berger Paints with little selling, Grace Kennedy for which there is also limited supply and Pulse Investments. In the Junior market, Demand for Derrimon Trading should continue with a resolution to be voted on at the upcoming AGM to split each share into 10 units. Supplies for Stationery and Office continue to trade around the $8 mark with limited supply, the stock could move higher in coming days or weeks. Jamaican Teas pulled back in the past week from $5.50 to $5 this week, but with limited stocks being offered for sale, is worth watching.

Grace, CPJ, Palace & Salada in TOP 10

Jamaican stocks have not had a spectacular year with six months having elapsed so far. The main market grew 6 percent and the Junior Market is up just over 11 percent for the year to date.
Palace Amusement with an increase of 164 percent was the only stock to double in price, C2W Music and Express Catering came close with more than 90 percent gain, while former TOP 10, Stationery and Office Supplies came in with an attractive 63 percent.
With the average PE ratio for Junior Market Top stocks at 6.2 compared to an average PE for the overall main market, of 11, based on 2018 estimated earnings and the main market PE is 7.9 for the top stocks, compared to a market average of 13, suggest that the rest of the year should deliver better returns than the first half. The sharp reduction in Bank of Jamaica policy rate to an unprecedented 2 percent and Treasury bill interest rates to record lows of 2.5 percent, is set to push stocks values much higher unless profits for most of the listed companies were to fall. A factor that is at play that is not known to the vast majority of investors, is the lack of supply for many stocks. The shortage of supply is set to result in a big rise in prices going forward before supplies will be able to satisfy what is likely to be a rising demand.
Out of the top lists are JMMB Group that rose by week end while Jamaica Broilers earnings was downgraded to $2 per share based on lower 2018 results from ongoing business operation and Pulse inched up in price to be squeezed out of the main market list. Stationery and Office Supplies slipped off the Junior Market list after Caribbean Producers just got squeezed in, with the price slipping to $5.10. Grace Kennedy, Palace Amusement and Salada Foods return to the top list with the latter price falling from $14.25 at the close of the previous week to $11.70 now. Importantly, Palace implemented price increases mainly between 4.8 and just over 8 percent for the movies, effective at the start of July, this resulted in projected earnings for 2019 now put at $150 per share, up from $140 at our last revision.
On Friday, prospectuses for Stanley Motta and Mayberry Jamaican Equity were published. These issues are not priced to bounce based on the underlying nature of these companies. Stanley Motta is a real estate play that will provide income that is better than most fixed interest securities with growth moderate going forward, while Mayberry is a close end mutual fund that growth is going to depend of appreciation in the investments held or to be acquired.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 45 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 39 percent to the market.
Stocks to Watch The stock closed without an offer at the close of the week. NCB Financial, PanJam Investment could move higher again this week as there continues to be buying but there is very limited supply of the stock on offer. Radio Jamaica that came for increased buying in the past week could get more attention with the network broadcasting the popular world cup matches as adverting revenues should climb as a result from the coverage. Others worth watching include Caribbean Cement, Berger Paints with little selling, Grace Kennedy for which there is also limited supply and Pulse Investments that traded a large volume on Wednesday and Thursday with the price shooting to $2.28 before pulling back on Friday. In the Junior market, demand for Derrimon Trading closed the week at a new high, during the past week and seems poised to move higher. Stationery and Office Supplies settled down during the week is set to rebound soon as selling around the $8 level starts to ease. Jamaican Teas pulled back in the past week to $5.50 but with limited stocks being offered for sale, it is worth watching.

NCB & JMMB back in TOP 10

JMMB Group, NCB Financial and Pulse Investments moved into the IC Insider.com TOP 10 at the close of the past week as Berger Paints and Palace Amusement exited the main market TOP 10.
There was no new entry to the Junior Market listing but Jamaican Teas climbed to a new high of $6 during the week and closed just below, at $5.95 and Stationery and Office traded down to $6.85 as an investor moved more than 400,000 shares at that price, the stock rebounded to $8 on low volumes as active supply has declined below this price level. Grace Kennedy rose to a new all-time high and Berger Paints rose to $22 during the week and were eased out of the top list. Earnings for Palace for 2018 and 2019 were revised lower even with the report that the company plans on opening a new cinema in the fast growing Portmore area, in 2019 and just eased out of the listing. Barita Investments fell by 25 percent during the week from $12 down to $9 as demand at the higher price evaporated.
Recent TOP 10 member PanJam Investment traded at a new high during the week and remains a buy with very limited supply of stock for sale while former TOP 10 listings jumped sharply during the week from $28.50 to $42.18 after the company announced that the directors will meet to discuss a dividend and stock split.
During the week Sygnus Credit was listed on the main and US dollar markets and Everything Fresh became fresh new listing on the Junior market. The shares of both, traded higher than the Initial Public Issue price. Sygnus US dollar listing remains above the IPO price while the Jamaican dollar denominated stock is trading below the IPO price.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 6.3 compared to an average PE for the overall main market of 11, based on 2018 estimated earnings. The main market PE is 7.7 for the top stocks, compared to a market average of 12.7.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 42 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 39 percent to the market.
Stocks to Watch The stock closed without an offer at the close of the week. NCB has good growth prospects for patient investors, the stock continues to trade around $100 where there is some selling but that level could be taken out soon and pave the way for more gains. PanJam Investment could move higher this week as there continue to be very limited supply of the stock on offer. Radio Jamaica could come in for increased attention with the network broadcasting the popular world cup matches as adverting revenues should climb as a result from the coverage. Others worth watching include Caribbean Cement, Berger Paints with little selling and Grace Kennedy for which there is also limited supply. In the Junior market, Demand for Derrimon Trading has been increasing recently and pushing the stock to new high during the past week. Stationery and Office Supplies settle down during the week before rebounding. Jamaican Teas came in for more buying in the week but with limited stocks being offered for sale is worth watching.

CAC & Broilers back in TOP 10

Jamaica Broilers returns to the main market TOP 10 list with a fall in the price to $22.10 by the end of the week from $26.30 last week and CAC 2000 returns after last been on the list, in December.
CAC replaced Medical Disposables while JMMB Group moved up to $29.45 to be replaced by Jamaica Broilers.
During the week the main market traded at a record close on two days but closed the week below the record high. The main market saw new buying interest coming in for a number of stocks, at the same time that supply for them have dried up. Interest rates on Treasury bills fell in the June auction and inflation remains negative for the year to May. With those developments the main market seems poised to move to more records in the weeks ahead. Strong upward movement is also being signaled by the fact that, the market is breaking out of a wedge formation.
The junior market broke through a declining resistance line during the early part of the week but retreated by week end. Technical indicators are pointing to a strong upward movement, with a golden cross approaching, with the long term moving average line set to cross over the medium and short term lines not too far away.
The past week was very eventful for the Jamaica Stock market as the main market surged to new all-time highs and the Junior Market surged more than 100 points in the early part of the week and broke through resistance before pulling back.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 6.2 compared to an average PE for the overall main market of 11, based on 2018 estimated earnings. The main market PE is 7.7 for the top stocks, compared to a market average of 12.7.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 44 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 41 percent to the market.
Stocks to Watch CAC 2000 reported strong half year results during the past week, with the second quarter more than doubling even after accounting for cost associated with issuing new preference shares. NCB Financial sits just below the TOP 10 list and has good growth prospects for patient investors. During the week, the price moved to $100 where there is some selling but that level could be taken out during the coming week and pave the way for more gains. PanJam Investment could move higher this week as there is very limited supply of the stock on offer. Investors should also keep an eye out for Sygnus Credit shares that list on Monday and should see a slight bounce in the price. Others worth watching include Caribbean Cement, Berger Paints and Grace Kennedy for which there was increased demand by the end of the week. In the Junior Market, Stationery and Office Supplies could decline further during the week but could find support in the mid $6 to low $7 region before rebounding. Jamaican Teas came in for buying in the week but supply has been limited and could result in more gains for the stock that traded at a record close of $5.50 during the week.

Grace & Carib Producers back in TOP 10

the past week was very eventful for the Jamaica Stock market as the main market surged to a new all-time high and the Junior market surges more than 100 points in the early part of the week and broke through resistance before pulling back.
Importantly, although the results for the first quarter of 2018 for many companies did not show strong gains while some showed declines compare with 2017, both the junior and main markets are at points to break out of a wedge formation. The moves are bias to the upside.
Medical Disposables jumped to $5 from $4.30 last week and was eased out of the top stocks and replaced by Caribbean Producers. Stationery and Office Supplies fell by the end of the week to $7.80, moving up on the list in the process, the order book of the stock suggest further decline before it bottoms out. Jamaican Teas price moved to $5.25 during the latter part of the week as demands picks up and supplies appear to have been declining, but by the end of the week it closed at $5.
In the main market, Jamaica broilers jumped to a record close of $26.30 on Friday, up from $21 at the end of the prior week and moved well outside the top 10 list, replaced by Grace Kennedy that slipped 50 cents in price by week end.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 6,2 compared to an average PE for the overall main market of 11, based on 2018 estimated earnings. The main market PE is 7.6 for the top stocks, compared to a market average of 13.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 44 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 41 percent to the market.
Stocks to watch. Scotia Group reported half year results during the past week, but there was nothing about them for investors to be excited about, as they showed lower profits in the April quarter than a year ago period. The stock price pulled back sharply on release of the results. The stock yields a dividend of 4 percent which is higher than treasuries and this could be an attraction for some investors while they await return to profit growth. NCB sits just below the TOP 10 list and has good growth prospects for patient investors. PanJam Investment that IC Insider.com reported on in a separate article last week caught the eyes of some investors who moved the price up to $51.98 and it could go higher this week has there is very limited supply for this one. Investors should also keep an eye out for Sygnus Credit that could have its shares listed by next week.

Medical Disposables & CPJ back in TOP 10

Medical Disposables in TOP 10

Lasco Financial rose to $5.99 by the end of the week, while IC Insider.com downgraded earnings for Caribbean Flavours to $1.22 for the 2019 fiscal year, with both moving out of the Junior Market TOP 10.
Medical Disposables that suffered a fall in price to $4.50 and Caribbean Producers moved into the TOP stocks listing for the Junior Market. There were no new addition to the TOP 10 main market stocks at the close of the past week. There were some changes in the rankings, most noticeable was Radio Jamaica, with a rise in price to $1.35 from $1.25 at the close of the previous week, as the stock moved closer to exit the top list. Salada Foods rose in sympathy to good half year results, to close at $13.10 from $11.26 at the start of the week, but it pulled back after trading at an all-time high of $15. Caribbean Cement moved down to $37.50 from $40.05 and Barita Investments rose to $12.53 from $11.50 while Berger Paints saw increased selling in light of the company’s posting increased sales but lower profits in the March quarter due to a number of factors, some of which are not likely to be repeated, in the other quarters of the year.
The past week was characterized by some sharp price fluctuations and index movements in both markets, with the ending to the release of most first quarter results. Interest rates fell to their lowest levels on Treasury bills and the central bank cut the overnight rate by 25 basis points during the past week, seem to have little effect on the market so far. That will change as the weeks roll on, it may be that investors are now taking a break for May, this coming week could have the answer.
Former TOP 10 Junior Market stock Stationery and Office Supplies, closed at a new record high of $9 last week after positing good first quarter results with earnings per share up 70 percent to 17 cents and looking as if $1 is possible for the full year, with the commencement of the production of plain paper books.
At the close of Friday, the average PE ratio for Junior Market Top stocks ended at 6.2 compared to an average PE for the overall main market of 10, based on 2018 estimated earnings. The main market PE is 7.3 for the top stocks, compared to a market average of 13.
IC Insider.com’s TOP 10 stocks now trade at an average discount of 38 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings and main market stocks traded at a discount of 45 percent to the market.
Stocks to Watch this week include, Barita, Grace Kennedy, PanJam Investment, Radio Jamaica, Salada, Jamaica Stock Exchange ordinary share, Stationery and Office Supplies. Although not yet listed, investors should keep an eye open for Sygnus Credit that saw its IPO more than twice oversubscribed.