Junior Market stocks gained 3 percent in the shortened trading week. In comparison, the Main Market rose 2 percent, a continuation of a 4 percent rise in the Junior Market index in the prior week and the Main Market rising, with less than a percentage point rise.
This week’s focus: Caribbean Cream reported full-year profit to February, with profit falling 38.5 percent to $55 million, from $89 million reported in the prior year, with revenues rising 10 percent and 16.2 percent in the fourth quarter. Depreciation charge almost doubled from $63 million to $115 million was the main reason for the fall in profit. IC Insider.com spoke with Christopher Clarke, Managing director of the company.
The price for skim milk powder fell sharply in March.
Clarke stated that the jump in Q4 revenues is due primarily to new products introduced in April last year and increased sales arising from the opening of the May Pen depot that resulted in lower selling price to the public.
Kremi, as the company is also known, seems set enjoy reduced cost in May and August quarters as the price of a critical raw material, milk solids, used in the production of ice cream. The price was $2,924 per ton at the start of November last year and moved to just over $3,000 in January and declined to US$2,747 at the beginning of March, US$2,527 at the end of March and US$2,380 in April and remained there until May 20 before pulling up to $2,549 towards the end of May.
The rise in the market during the past week did little for IC TOP 10 stocks, resulting in no movement in or out of the TOP 10.
The week closed with the three top Junior Market stocks with the potential to gain between 387 to 705 percent by 2021 as Caribbean Producers, followed by KLE Group and Elite Diagnostic. In the Main Market, Radio Jamaica continues to lead, followed by Berger Paints and JMMB Group with projected gains of 165 to 212 percent.
The targeted average PE ratio of the market is 20 based on the profits of companies reporting full year’s results for the financial year ending after the second quarter of 2020 up 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 and the Junior Market at just 9.6, based on current 2020-21 earnings. The PE ratio for Junior Market Top 10 stocks averages a mere 5.1 at just 53 percent to the average of the overall Junior Market. The Main Market TOP 10 stocks trade at 8.7 or 62 percent of the PE of the overall market.
The average projected gain for the IC TOP 10 stocks is 330 percent, for the Junior Market and 138 percent for the JSE Main Market, based on 2020-21 earnings, an indication that there is greater 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. Projected gains are based on earnings and PE ratios, projected for the current fiscal year. 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.
