The past week was quiet for IC TOP 10 listings, resulting in no change to the list at the end of the week that saw the local market trading in a narrow band and the Junior Market closing at the highest point since August 28 and the Main Market since the end of August.
Scotiabank profit drops in Jamaica.
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 292 to 695 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 results, projected to show recovery from the 2020 financial year final numbers. The top three Main Market stocks, with expected gains of 205 to 264 percent, are Berger Paints followed by Radio Jamaica and JMMB Group. All three suffered declines during the week.
This week’s focus: Scotia Group reported a net income of $5.56 billion for the nine months ending in July, compared to $9.79 billion for the corresponding 2019 period. Overall, loans advanced, grew 12 percent mainly due to the strong performance of the Commercial Banking unit, increasing 24 percent versus the prior year. 
Retail loan grew 5 percent year over year, driven by strong mortgage growth of 16 percent. Total revenues, excluding expected credit losses for the nine months, ended July at $32.1 billion, a reduction of $1.7 billion or 5.1 percent, compared to 2019. For the July 2020 quarter, gross revenues fell from $12.4 billion to $11 billion, with non-interest income contributing $1.1 billion to the decline. Administrative and other expenses were essentially flat at $5.8 billion year over year, a $2 billion increase in provision for expected loan loss helped push profit down in the quarter, to $1.55 billion from $4.2 billion in 2019. Notably, while loans amounting to $221 billion at the end of July grew 12 percent year over year, loans declined modestly from $223 billion at the end of April, the result of the increased credit loss provisioning.
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, an indication of the potential gains ahead. The JSE Main Market ended the week, with an overall PE of 15.1 and the Junior Market 10.9, 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 at just 55 percent to the average of the overall Junior Market. The Main Market TOP 10 stocks trade at a PE of 8.2 or 54 percent of the PE of the overall market.
The average projected gain for the Junior Market IC TOP 10 stocks is 279 percent, and 153 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 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.
