Stocks to Watch This week

NCB Financial Constant Spring Road.

Last week’s stock to watch, former IC Top 10 listing, NCB Financial, released record full year results and announced an interim dividend of 70 cents per share with investors welcoming the news by driving the stock to a record intraday high of $135.
The stock closed the week at $133 with good volume passing through the market. Demand is building for NCB Financial between $125 and $131, with offers at $133, $135 and then at $138. The stock could make more gains in the week if demands picks up. Technical chart shows NCB Financial heading to $155, an area of potential resistance, that means that the current price is not very far from the short-term target.
This coming week, several companies will report results for the third quarter. Some of them could result in stock price movements. Other stocks to watch this week are Stationery and Office Supplies that should report third quarter results that should benefit from profit from the new book manufacturing business as well as from contract that was being worked on from the second quarter and slated for completion in the third quarter. Seprod is another to watch, now that the allocation of the 92 million shares that were recently offered to the public should be known on Monday. Third quarter results will be pasted during the week but when that is combined with the likelihood that many investors will end up getting only a small amount of the shares they applied for, it will be anyone guess what impact both could have on the price in the secondary market.
Following the release of full years’ results with an increase of 84 percent to $374 million and a 315 percent increase in the last quarter to $193 million at Barita Investments, investors have been buying the stock in a second wave of demand, its one to be watched going forward. The Jamaica Stock Exchange has been enjoying increasing trading in the second half of the year and this is expected to provide a big boost in profit for the quarter and year to date, the stock should benefit in the coming week from this.

Scotia Group eases into IC Top 10

Scotia Group could see strong growth in 2019 profit.

The big news this week is the entry of Scotia Group to the main market TOP 10 with a fall in the price to $50 at the close of the week. Based on IC Insider.com forecast, Scotia is set to earn around $4.60 for the 2018 year to October with the PE at just 11 times earnings.
Scotia replaced Berger Paints that was merely squeezed out to sit just outside the TOP 10 at the number 11 spot. Top 10 list movements were modest for the past week, following the previous week of volatility. In the Junior Market, Honey Bun sneaked into the TOP 10 by easing out Jamaican Teas in the process.
Scotia Group, reported flat profits for the nine months from normal ongoing operations. Gains from sales of Credi Scotia and exceptional foreign exchange gains in the July quarter push profit up well above that of 2017. Importantly, the best indicator going forward for increased profitability, is growth in loans. During the July quarter loans grew a strong 3.7 percent between April which works out at an attractive 15 percent per year that should equate to 25-30 percent profit growth in 2019 if the trend continues.
The main market closed the week with the overall PE slipping to 15.3 from 15.6 from the previous week, the PE of the Junior market remained unchanged at 5.5 from the prior week.
The PE ratio for Junior Market Top 10 stocks average 9.3 and the main market PE is now 9.7.
The TOP 10 stocks now trade at an average discount of 40 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. The main market stocks trade at a discount of 37 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.

Just one change in IC Top 10

Changes in IC Insider.com Top 10 list were modest for the past week which followed a previous week of volatility.
tTech moved back in price to $6 from $5 and moved out of the Junior Market TOP stocks to be replaced by Caribbean Producers that fell to $6 from $6.80 at the end of the previous week. These were the only movement in and out of the TOP 10.
Investors should keep an eye open for former Top stock, NCB Financial that should be releasing full year results and announcing final dividend for 2018, on Thursday
The main market closed the week with the overall PE slipping to 15.6 from 15.4 from the previous week, the PE of the Junior market moved up to 15.4 from 15.4 at the close of the prior week.
The PE ratio for Junior Market Top 10 stocks average 9.2 and the main market PE is now 9.9.
The TOP 10 stocks now trade at an average discount of 41 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. The main market stocks trade at a discount of 37 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.
There will be no Market Watch report for this week.

Shake up in IC Insider Top 10

Volatility was the order for the Jamaican stock market for the past week as the market indices bounced around as declining stocks were plentiful as the Junior Market ended with three changes and the main market two.
The Junior Market lost Access Financial that closed the week at $49 from $45.50 to start the week. Iron Rock Insurance that climbed to $4.82 from $4.50 and Lasco Manufacturing that inched up to $3.60 from $3 exited as well. Coming into the Junior Market TOP 10 are Elite Diagnostic, Dolphin Cove and Lasco Distributors.
Caribbean Cement reported third quarter results with lower profit for the nine months than for 2017 but foreign exchange losses was the main factor. The exchange rate has now reversed and that should turnaround the negative impact by the end of the year, nevertheless IC insider.com downgraded full year earnings to $3.53 per share, resulting in the stock dropping out of the main market TOP 10 along with JMMB Group that rose back to $34 from $32. The moves allowed Barita Investments that fell to $18 and Salada Foods that slipped to $21.50 to re-enter the top list.
The main market closed the week with the overall PE slipping to 15.4 from 16 from the previous week, the PE of the Junior market moved up to 15.4 from 16.4 at the close of the prior week.
The PE ratio for Junior Market Top 10 stocks average 9.1 and the main market PE is now 9.6.
The TOP 10 stocks now trade at an average discount of 41 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. The main market stocks trade at a discount of 37 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.
There will be no Market Watch report this week.

Major shake up in Junior Market Top 10

The Junior market tumbled 5 percent during the past week and shook up the TOP 10 stock list resulting in Caribbean Cream that fell out of the list last week coming back in along with tTech, Jamaica Teas and Lasco Manufacturing with a fall in price to $3, also returned to the TOP list.
Medical Disposables moved up in price from $6.50 to $7.20 at the end of the week to exit the TOP 10. Honey Bun inched up in price and was eased out and so was Dolphn Cove that moved into the list last week and Lasco Distributors this past week. In the main market Barita Investments hit a new high during the week and moved on to be replaced by JMMB Group that closed the week at $32 after opening at $35.01.
Iron Rock moved back into the TOP 10, last week reported a small profit of $1 million in the third quarter, up from a loss of $14 million in the 29017 third quarter and a loss of $7.6 million for the nine months versus a loss of $60 million in 2017. Caribbean Cream fell at the end of the week to $5 is now showing potential gains of 160 percent and follows Paramount with 173 percent, that reported lower first quarter profits of $7 million compared to $34 million in 2017, from increased revenues but with a foreign exchange loss eating up $18 million of the 2018 income. In the main market Caribbean Cement with potential gains of 120 percent leads the main market stocks in attractiveness, followed by Wisynco with likely gains of 114 percent.
The main market closed the week with the overall PE slipping to 16 from 16.3 from the previous week, the PE of the Junior market moved up to 16.4 from 15.8 at the close of the prior week.
The PE ratio for Junior Market Top 10 stocks average 9.2 and the main market PE is now 9.8.
The 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. The main market stocks trade at a discount of 39 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.

Barita could spike higher this week

Barita last traded on the JSE as high as $20 on Friday.

The main market of the stock exchange ended the week at another record close with a number of individual stocks hitting new highs but this coming week could well be more challenging, investors have to bear in mind that the supplies for several stocks are very limited and could result in big price movements as happened last week.
Technical chart shows NCB Financial heading to $155 but it traded at new high of $134 during the past week which is not very far from the target of potential resistance. Whether it goes higher during the coming days is anyone’s guess but it is worth watching. Caribbean Cream moved up to $7.90 from $6.16 at the end of the previous week. The company posted better profit results in the August quarter but with less gains than in the first, as administrative cost rose to negate some of the top line growth. Those results may be unlikely to move the stock forward in the short term.
The Junior Market continues to inch forward as it appears that investors are waiting on results. They got Caribbean Cream and Paramount Trading at the end of week, but no major upward price movement is expected.

Caribbean Cream sales & profit slowed in Q2.

The indicators point to continued increased interest in the main market stocks with a number of them are high on the list to watch for this week with less indications that Junior Market stocks will move upwards in droves anytime soon. Stocks of interest this week are Grace Kennedy, Barita Investments with limited supply and technical indicators pointing to a price of $22.50 initially before going on to $27.50. Berger Paints, Jamaica Producers has very little stock offered for sale and that could result in a sharp spike in price at any time, Mayberry Jamaican Equities (MJE), Mayberry Investments that will benefit from increased profit of MJE, NCB Financial, Wisynco Group that has gone back above the $10 price level, CAC2000 that is very scarce, Main Event and Stationery and Office Supplies that seem to have exhausted selling at $09.50 with $10 being the possible next level. A number of these have limited supplies for sale.
With the average PE of the market now at a comfortable 16 times 2018 earnings, stocks valued less than the market average could see increased interest as investors look for bargains.
Grace Kennedy seems ready to break out of the $60 range as there is no big supply on offer now and during the past

Caribbean Cement price is stuck in the mud for now.

week, it traded as high as $75. Caribbean Cement keeps trading between $46 and $50, but there appears no real desire to move the price forward, this one could be negatively affected by foreign exchange losses in the September quarter. Kingston Wharves has always had limited supply, so it could move higher going forward, even the valuation is rich. Supply of JMMB Group has dried up and that could create the environment for the price to continue to move higher, it is also one of the lower valued stock in the main market. Investors need to bear in mind that the price is currently at a resistance level at $37, so it may move sideways with an upward bias for a while, unless strong buying pushes over this level.
An overall view of stocks indicates that 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 Junior Market is being guided by an upward rising long-term support line and a golden cross. The golden cross is a very strong bullish long-term signal, but market needs fuel of rising profits.

Grace, Proven, Access & Iron Rock in TOP 10

Grace Kennedy HQ

Decline in the prices of three stocks during the week and gains by others resulted in changes to the IC Insider.com TOP 10 list this week.
Grace Kennedy pulled back to $59.50 and Proven Investments down to 21 US cents and Access Financial falling, with the offer at $45.50, Dolphin Cove and Iron Rock declining to $4.50 moved into the top stock list, taking the place of Sagicor Group that moved up to $42.55 and Salada Foods that moved up to $24.95 in the main market, while Caribbean Cream that fell to $6.16 to enter last weeks’ list moved up in price to $7.68 and with a slight downgrade to earnings to 65 cents per share, fell out of the top list and Caribbean Producers climbed to $7 and is also out.
The main hit new historical highs on Friday resulted in the overall PE for the main market rising to 16.3 up from 15.8 from the previous week, the PE of the Junior market remained unchanged at 15.8.
The PE ratio for Junior Market Top 10 stocks average 9.5 and the main market PE is now 9.9, marginally higher than the prior week’s level, as the market continues to see an upward revaluation of the multiple.
The TOP 10 stocks now trade at an average discount of 40 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. The main market stocks trade at a discount of 39 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.

Watch NCB & Kremi this week

NCB Financial could be a winner this week.


The main market of the stock exchange closed the week with two of the highest daily increases in the market index ever, a clear sign that investors want stocks to buy and the supply remains very limited and putting the bulls in control.
The moves last week in the main market and since the start of August has set the stage for several stocks to be on the move this week.
The Junior Market continues to inch forward as it appears that investors are waiting on results. They should get Caribbean Cream this week and that should be a strong set of results as the company benefits from lower raw material cost compared to the first quarter when profits jumped 59 percent.
The indicators point to continued increased interest in the main market stocks with a number of them are high on the list to watch for this week. Stocks of interest this week are Grace Kennedy, Barita Investments, Berger Paints, Mayberry Jamaican Equities, NCB Financial, Wisynco, Caribbean Cream, CAC 2000, Main Event and Stationery and Office Supplies, many of these have limited supplies for sale.
With the average PE of the market now approaching a comfortable 16 times 2018 earnings, stocks valued less than the market average could see increased interest as investors look for bargains.
NCB Financial went sideways for around two weeks but bids started building close to the closing prices last week and that could help it move higher this week. Barita had a relatively strong day on Friday with 261,000 shares trading, leaving only a minute amount of 6,200 units on offer at $25.

Caribbean Cream should post big gains in profit in Q2 this week.

Grace Kennedy seems ready to break out of the $60 range as there is no big supply on offer now and during the past week, it traded as high as $75. Caribbean Cement keeps trading between $46 and $50, but there appears no real desire to move the price forward, this one could be negatively affected by foreign exchange losses in the September quarter. Kingston Wharves has always had limited supply, so it could move higher going forward, as can be seen from the big jump on Friday to $83 at 52 times 2018 earnings the valuation is rich. Supply of JMMB Group have dried up and that could create the environment for the price to continue to move higher, it is also one of the lower valued stock in the main market. Investors have gradually sucked out most of the supply of Stationery and Office Supplies, below $10 and the price could move to the $10 level during the course of the week.
An overall view of stocks indicates that 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 Junior Market that traded recently at an all-time high, is being guided by an upward rising long-term support line and a golden cross. The golden cross is a very strong bullish long-term signal.

Kremi surges to top IC TOP 10

Caribbean Cream outlet in Kingston.

Investors pushed Caribbean Cream down to $6.16 on Friday to surge to the top of the list this week, while Stanley Motta was pushed down to $4.50 to reenter this Top 10 stock list.
JMMB Group jumped sharply to close at a new record high of $37 on Friday and was pushed out of the top tier main market list while Iron Rock shot to a record $5 and dropped out of the Junior Market listing. The market could be making a big mistake with Stanley Motta that is clearly undervalued. IC Insider.com upgraded Caribbean Cream earnings to 85 cents from 70 cents with a sharp fall in the price of milk solids since May by nearly 24 percent that should cut the direct input cost of producing ice cream.
Gains in the two markets are driving the PE ratio of the market higher with the overall PE for the Junior and main market, both rising to 15.8 as of Friday, up from just over 15 last week, as the valuation multiple grows with historically low interest rates and high liquidity abounding in the financial market.
The PE ratio for Junior Market Top 10 stocks average 9.2 and the main market PE is now 9.4, just marginally lower than the prior week’s level, even as the market continues to see an upward revaluation of the multiple.
The 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. The main market stocks trade at a discount of 40 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.

Review of 2018 stock market forecast

Palace hits a new high of $1,500 to be top performer in 2018 so far.

“ Assessment of the market, suggests that 2018 could be a grand year, with overall price gains likely to be in excess of 40 percent”, a quote from IC Insider.com in February, this year.
“Based on projected earnings for 2018, the average PE ratio suggests that main market stocks should grow by 26 percent. Falling interest rates could add another 20 percent to gains during the year, bringing overall gains in excess of 40 percent.”
“Technical readings of the market have the main market heading initially to around 390,000 points or 23 percent ahead of the December close, for the all Jamaica Index, before resistance sets in and then moving much higher, later on’ the IC Insider.com forecast for 2018 stated.
With almost three more months to go, before the year ends, the main market is broken through the 390,000 points mark to be up 31.7 percent for the year to date, there seems no stopping it for now.
The report in February stated that the main market was caught in a wedge formation, trading just below the upper end of channel that can be traced to late 2015. The wedge could hold the market in consolidation mode for a short time, a month or two, before breaking out, most likely to the upside.
IC Insider.com projects that many of the main market heavy weights will find it tough to repeat the strong gains they enjoyed in 2017, if that is the case, their impact on the market index is likely to be less than for 2017. Another factor that could make a repeat of 2017 tough, is the movement of interest rates. Last year, Treasury bill rates fell 29 percent from 6.56 percent to 4.83 percent, that level of decline, is unlikely to happen in 2018, even as some of the decline in the latter part of 2017 is yet to be fully reflected in the prices of stocks to date and should positively affect prices in 2018. IC Insider.com is forecasting rates on 182 days Treasury bill  hitting 3 percent by the end of the 2018 first quarter. Treasury bill rates in 2018 at 1.7 percent, have fallen more sharply than in 2017.
The original piece stated that “there are a number of other factors at play that are set to impact the market. Increasing employment is taking place with the highest number of persons employed in the country’s history. Attendant with that is the sharp fall in unemployment from more than 16.3 percent in 2013, to just over 10 percent in 2017. The annual net employment is growing around 30,000 persons per year and that could rise as the economy gains steam. This will mean more spending and increased tax collection for government. Alpart resumption of Alumina production is a big positive for the overall economy, for increased government revenues and more demand for local goods and services, some of which are provided by listed companies. The tourism sector is enjoying strong growth, apart from increasing foreign exchange intake for the country, will have direct impact on Jamaica Producers and Sagicor X Fund. Jamaica seems to be going through a construction boom with several new buildings under construction, Caribbean Cement and Berger Paints should benefit considerably from such developments.”
“More listings on the stock market will result in increased fee income for JSE and brokerage houses, from increased trading volumes.”
The TOP 10 stocks include a few surprises while there are others that sit just outside the top stocks that investors may still want to keep a keen eye on. Investors should be looking beyond 2018 as medium term gains beyond 2018 could be strong for stocks that will benefit from current developments, long term.
The TOP 10 selection is selling well below the average PE of the Main market of the Jamaica Stock Exchange at just over 6.3 versus nearly 12 at the end of 2017.

Barita last traded on the JSE as high as $20 on Friday.

Barita Investments moved more into fee based income and that is working well for them, with sharp growth, while net interest income stagnates. The prospects for continued strong growth in fee income continues with more investors seeking better returns than in the fixed interest market. The company should see a change in ownership soon and that could see a more aggressive approach to management that could optimize returns from exiting business and newer lines. Unrealized gains on investment ought to be factored into its earnings in valuing the stocks and that would boost its value considerably, the market is not paying attention.
Berger Paints is set to be a big winner with increasing sales coming from a buoyant construction sector resulting in increased profit and what IC Insider.com expects to be a healthy dose of dividend payments. It could become the next Carreras from a dividend yield standpoint but with growing profits. The company will benefit from lowering of overhead cost which was evident in 2017.
Jamaica Broilers continues to grow organically and from new business being acquired. Growth will continue as the Haitian market deliver greater returns form a growing market while the poultry demand in Jamaica continues to grow.
Caribbean Cement will benefit from lower operating cost, increased sales and a planned cut in financing of the lease which is said will cut hundreds of millions of dollars out of it cost that could come close to $2 per share per annum.
Palace Amusement Company, currently enjoying sell out cinemas with block buster hit, is one of those unusual choices. It enjoys minimal trading but it could surprise on the upside if all goes well. Growth in the economy and increased employment will help to boost patronage going forward and will aid in profit growth as well.
JMMB Group put out outstanding Q3 results with a 39 percent increase in profit and strong gains in revenues, auguring well for 2019 outcome.
The growth potential remains strong and investors in the stock will reap rich rewards down the road. Just one stock that requires patience. By the way fees and commission income jumped an impressive 71 percent to $512 million in the quarter and 53 percent in the nine months, over the similar period in 2016 and should continue to do so going forward.
Radio Jamaica continues to disappoint with below expected revenues and profit. It could return to favour but needs to generate more income from advertising. This is one to accumulate for a payoff down the road.
The other three stocks, Sterling Investments, Grace Kennedy and Sagicor Group are undervalued and could deliver some decent returns to patient investors.
Below the TOP 10 are strong candidates to deliver decent returns this year and beyond, the list includes NCB Financial that is on a strong growth trajectory and recently listed Wisynco Group that should generate earnings around $1.10 for the 2019 fiscal year that starts in July.