2 new IC TOP 10 listings

This weeks’ review comes against the back drop of the main market hitting a record high on Friday in the morning session and the Junior market continuing to eke out modest gains.
Unlike last week when there are several changes to the TOP stocks, there are only two new additions this week. Victoria Mutual Investments and Jamaican Teas are out of the TOP 10 with Berger Paints that fell in price to $18.76 and Caribbean Cream are back in the TOP 10 lists.
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.
The past week saw a few results being posted and more are expected this week, including NCB Financial and Proven Investments that entered the TOP 10 last week, both are expected to report positive gains with NCB continuing from increases seen up to the second quarter and Proven that President, Christopher Williams informed IC Insider.com is performing well in all divisions, see Collapse of the JSE US market.
The PE ratio for Junior Market Top stocks averages 7.4 compared to an average PE for the overall market of 11.8, based on 2018 estimated earnings and the main market PE stands at 7.5 for the top stocks, compared to a market average of 12.5, this is a good indication of the level of undervaluation of these stocks.
IC Insider.com last week stated that there are warning signs of a tsunami that is on the way for the market. During last week one more sign came to the fore with a sharp drop in Treasury bill rates again, this coupled with scarcity of supply for many stocks. Investors seem to be going about their business as if prices will remain around current levels for a prolonged period. Late comers to buying stocks who try to join the party will find get stocks but at a much higher prices as the year rolls on and that is confirmed by technical indicators in both the Main and Junior markets.
The TOP 10 stocks now trade at an average discount of 37 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 40 percent to the market.

2nd buy out for Access Financial in a year

Junior market listed micro financier, Access Financial Services has acquired the loan portfolio, fixed assets and trade name of Micro Credit Limited, a release to the Jamaica Stock Exchange revealed. The acquisition is the second make by the company in just over a year.
The CEO of Access Financial, Marcus James, says “the acquisition is in keeping with the company’s overall expansion plan to grow its share of the local micro lending market. The business combination will see MCL continuing to serve the micro credit customers using its existing methodologies which have been proven both locally and internationally in that segment of the market resulting in above average portfolio performance. The alignment of the two entities will also result in efficiencies of scale.”
MCL was established in 2003 and has 6 branches islandwide. Christopher Williams, Proven Investments CEO stated earlier this month, that MCL was around the same size as Damark which were acquired by Access in May 2016 at a cost of $180 million which included, the loan portfolio of $148.7 million.
In 2015, Access acquired the loan portfolios of Asset Management Company and Appliance Traders for just over $500 million.