General Accident in IC Top 10 Mailpac out

The price of General Accident dipped to $6.65 at the close of the week, from $7, last week and now returns to the IC Junior Market TOP 10, replacing Mailpac Group, with the price moving from $2.01 at the end of the previous week to close this week at $2.14.
There was no change in the Main Market TOP 10 list for the week that saw the Main Market stocks lopping 6,300 points off the market index while the Junior Market rose 26 points.
The top three stocks in each market saw little change in the rankings, leaving the top three Junior Market stocks, with the potential to gain between 239 to 682 percent by March 2021. The first is Caribbean Producers, followed by Lasco Financial and Stationery and Office Supplies, a new entry in the third position.
The top three stocks in the Main Market, with expected gains of 186 to 208 percent are, Radio Jamaica followed by Berger Paints and JMMB Group.
This week’s focus: Seprod posted a 136 percent rise in profit to $568 million, for earnings per share of 77 cents, for the second quarter to June and 117 percent for the six months to $1.2 billion. Profit from continuing operations grew at a slower pace at 38 percent for the second quarter and 41 percent for the half-year. Revenues increased 18 percent to $9.5 billion for the June quarter and 12 percent to $18.6 billion for the six months. The company shuttered its loss-making sugar operations last year and that is helping with the improvement in results.
The stock is well outside the TOP 10, but the company is one of the top performers on the market before the move into sugar production. With its focus on exports and new ventures, the future looks bright for it. The stock is an excellent long-term investment and is likely to record some gains during the rest of 2020. IC is projecting $4 per share earnings for the current year and it now trades at a PE ratio of 14, with limited upside potential in the short term.
The targeted average PE ratio of the market is 20 based on the profits of companies 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. The JSE Main Market ended the week, with an overall PE of 14.8 and the Junior Market at just 11.3, based on IC’s projected 2020-21 earnings. The average PE ratio of the Junior Market has been slowly rising and narrowing the gap, with the Main Market as investors seem to see better profit opportunities in this sector. The PE ratio for the Junior Market Top 10 stocks averages a mere 6 at just 53 percent to the average of the overall Junior Market. The Main Market TOP 10 stocks trade at a PE of 8.4 or 57 percent of the PE of the overall market.
The average projected gain for the IC TOP 10 stocks is 269 percent, for the Junior Market and 146 percent for the JSE Main Market, based on 2020-21 earnings, an indication that there is the potential to make greater gains in the Junior Market than in the Main Market.
IC TOP 10 stocks are likely to deliver some of the best returns, up to March 2021. The projected gain for each stock takes into account the earnings and PE ratios for the current fiscal year. The ranking of stocks is in order of likely increases, with the highest-ranked, being the most attractive. The ranking of stocks is in order of likely increases, with the highest-ranked, being the most attractive. Expected values will change as stock prices fluctuate and will result in movements of the selection 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.

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