The Jamaican stocks are poised to record a solid performance in 2023 as interest rates commence their decent later in the year and profits of several companies enjoy significant gains. Inflation has passed its peak from 2021 and trended down in 2022 towards the 7 percent level and is set to fall further. The economy is growing as the critical important tourism sector enjoys a sharp recovery while certain input costs have normalized.
Investors should focus on the likely performance of individual companies rather than on the market. Even as interest rates rose sharply last year, it did not prevent the majority of stocks in the Junior Market from rising and nearly half those in the Main Market, as profit growth out weight pressure from rising interest rates. Careful looking at economic developments for 2023 points to another year when there will be significant gains for several companies as profits of many will rise and BOJ cut interest rates as inflation subsides and foreign exchange inflows jump.
Dolphin Cove stock projected to a big 2023 winner.
A key investment observation reveals that good stocks deliver optimal returns over an extended period. They do not usually make huge moves over a short period that is clearly the case with ICTOP15 stocks that may deliver good gains over more than a one year period. Investors need to take this approach to benefit fully from the attractive bargains that currently exist in the Jamaica Stock Market, with uncertainty as to the exact timing of the market takeoff.
The past year ably demonstrated the need to focus on companies, not the markets. The Junior Market managed to record gains of 16.3 percent for the year, but it turned out to be lower than the 29.7 percent gain in 2021. The main market declined at the end of the year as investors forsook the financial institutions in the market and essentially pushed the market down due to rising interest rates.
2022 started off quite brightly for the Jamaica stock market, especially Junior stocks that were up 27 percent by May, but increasing interest rates placed a damper on the performance of stocks, even then, 31 stocks in the Junior Market rose, with 21 gaining 11 percent to a high of 312 percent and 15 stocks gaining over 50 percent, while 7 gained 100 percent or more.
Caribbean Producers to be a big 2023 winner
While the main market index fell 10 percent for the year, the market ended the year with gains in 22 stocks, with gains between two and 82 percent compared with 25 losers that fell from 3 percent to 40 percent. Increased profits were the primary reason for the gains in both markets.
In some cases, some stocks that did spectacularly well in the early part of the year pulled back markedly after Treasury bill rates surged to 8.5 percent in April and remained at that level to the end of the year.
The 80:20 rule of investing shows an average of only 20 percent of stocks that end in the TOP10 in a year repeat in the following one, while around 40 percent of the 10 worst performers end up in the TOP10 in the following year that is supported by data going back 40 years in the local market. The clear message is that investors should not get carried away with an outstanding winner and miss out on other opportunities.
The ICTOP15 are chosen based on the best information available, but there are many other factors to be aware of in 2023 that could swing in favour of or against the selections. Shipping rates that were very high for some time in 2022 are almost back to normal and will result in lower input costs for many listed companies.
Everything Fresh to enjoy gains from tourism in 2023.
Interest rates have been hiked appreciably to contain inflation and foreign exchange demand. With inflation subsiding, interest rates could start a downward trek in the first half of the year and probably before the first quarter ends, when this happens it will be a positive sign for stocks. Worldwide, many prices are declining. Locally, tourism has bounced back strongly but could jump around 50 percent up to April and have significant implications for the broader economy and several listed companies. Bear in mind that the revenues and profits of companies will be affected in different ways and it will be challenging for forecasts to be always close to the mark. 2023 will be a year to key keen eyes on ongoing developments that could affect companies and their operations.
Two key features of the stock market in 2023 will be the strong rebound in tourism traffic in the first half of the year compared with 2022, this development will contribute to above average GDP growth in the first half but will also result in a significant jump in revenues and profits for a number of companies, Caribbean Producers, Dolphin Cove, Everything Fresh and Express Catering that are heavily involved in trading in that sector.
NCB Financial could move from worst performer to TOP10 2023 performer
For the first quarter of 2022 visitor arrivals to Jamaica averaged approximately 72 percent compared to 2019 and 97 percent in the April to June period but in September and October the numbers climbed approximately 12 percent over that for 2019 when this level of recovery is factored into the equation for 2023 visitor arrivals in the first half of the year quit drum by 30 percent or more.
Banks benefited from increased interest rates in 2022 and will continue to do so in 2023 and should see some reversal in losses recorded last year as other comprehensive income. Other companies that would benefit but to a lesser degree are companies such as Wisynco and Jamaica Broilers in addition ICInsider.com expect interest rates to decline during the course of the year and that should provide added stimulus to the market.
A lot of potential gains were not factored into stock prices in 2022 many attractive ones are cheap, investors only task is to make the right choices to pick up gains in 2023 that could be much more exciting than normal.
The Junior Market has 15 stocks representing 32 percent of the market, with PEs from 15 to 35, averaging 21 compared with the above average of the market. The top half of the market has an average PE of 18 and shows the extent of potential gains that lie ahead for the TOP 10 stocks. The situation in the Main Market is similar, with the 20 highest valued stocks priced at a PE of 15 to 110, with an average of 33.5 and 24 excluding the highest valued ones and 22 for the top half excluding the highest valued stock.
Some of the above gains will not be fully reflected until May 2023 as stocks move primarily in response to the release of results. Companies with earlier year ends will discount most of the earnings before those with later periods.
Main Market stocks did poorly as a group in 2022, but they should enjoy a better year in 2023 with interest rates falling during the year and investors are presented with many choices of undervalued stocks. Regardless, Junior Markets stocks are points to outperform those of the more mature companies in the Main Market.
A total of 40,710 shares were traded for US$9,508 compared to 46,347 units at US$3,524 on Wednesday.
Proven Investments lost 0.79 of one cent in ending at 18.51 US cents after trading 15,867 shares, Sterling Investments rose 0.11 of a cent to close at 2.08 US cents with the swapping of 61 stocks. Sygnus Credit Investments J$ share remained at 13.62 US cents after 30 stock units passed through the market, Sygnus Credit Investments USD share ended at 9.99 US cents with 183 units changing hands and Transjamaican Highway gained 0.02 of a cent to end at 0.97 of one US cent after exchanging 20,744 units.
A total of 6,062,724 shares were traded for a mere $21,930,574 down from 7,402,150 units at $57,740,739 on Wednesday. Trading averages 101,045 units at $365,510 versus 127,623 shares at $995,530 on Wednesday and month to date, an average of 120,650 units at $815,557, compared to 130,452 units at $1,040,581 on the previous day. December closed with an average of 604,110 units at $4,072,598.
The PE Ratio, a formula to ascertain appropriate stock values, averages 14.4 for the Main Market. The JSE Main and USD Market PE ratios incorporate earnings forecasted by ICInsider.com for companies with the financial year ending between November and August 2023.
Guardian Holdings dipped $3 to $522 after an exchange of 416 stocks, Jamaica Producers climbed $1.07 in closing at $22.99, with 1,500 shares crossing the market, Jamaica Stock Exchange fell 80 cents ending at $14.50 in an exchange of 12,167 units. JMMB Group increased 40 cents to close at $33 while exchanging 58,195 stock units, Margaritaville shed $2.93 to close at $16.62 in exchanging 1,959 shares, Massy Holdings dropped $1.45 ending at $78.50 in switching ownership of 58,914 stocks. MPC Caribbean Clean Energy gained $9 to end at $84 with the swapping of 4,637 stock units, NCB Financial gained $1.79 to $80 trading 7,843 shares, Palace Amusement rallied $80 in closing at a 52 weeks’ high of $1680, with 404 stocks changing hands. Proven Investments increased 49 cents to end at $27.99 as investors exchanged 17,978 units, Sagicor Group rose $3.80 to $54.80 with investors transferring 854 stock units, Scotia Group popped $1.40 to close at $34.40 in trading 13,614 stocks. Seprod dropped 90 cents in ending at $69.10 after 1,831 shares changed hands, 
Stanley Motta shed $1.15 in closing at $4.10 after a transfer of 15,876 units and Supreme Ventures climbed $2.52 after ending at $29.87 with an exchange of 5,708 shares.
A total of 7,085,346 shares were traded for $18,259,575 compared with 10,975,198 units at $26,988,194 on Wednesday.
The PE Ratio, a measure of computing appropriate stock values, averages 12.6. The PE ratios of Junior Market stocks incorporate ICInsider.com projected earnings for the financial year that fall between November this year and August 2023.
Express Catering dipped 10 cents to $5.20 after an exchange of 20,181 shares, Future Energy Source lost 19 cents in ending at $4.92 as investors exchanged 326,338 stock units, General Accident dipped 17 cents to close at $4.90 in switching ownership of 100 stocks. Honey Bun rallied 10 cents to end at $7.30 after exchanging 11,486 units, iCreate gained 27 cents to $1.77 with an exchange of 466,481 stock units, Indies Pharma climbed 50 cents in closing at $3.25 as 12,306 shares passed through the market. KLE Group declined 28 cents to end at $1.71, with 641 units clearing the market, Knutsford Express increased 75 cents to $8.95, with 6,090 stocks crossing the market, Lasco Manufacturing shed 30 cents to close at $4 after a transfer of 53,088 shares. Limners and Bards popped 24 cents in closing at $2.67, with 35,572 stock units changing hands, Lumber Depot gained 10 cents to end at $2.40 with investors transferring 33,816 stocks, 
Main Event rose $1.59 to close at $8.59 trading 44,554 stock units. MFS Capital Partners advanced 13 cents to $2.94 after trading 154,025 shares, Paramount Trading dipped 17 cents to $1.63 in exchanging 9,322 units and Spur Tree Spices rallied 13 cents to $3.13 in trading 151,160 stocks.
Investors traded 1,737,000 shares for $8,045,167 verusus 515,843 stock units at $9,566,308 on Wednesday.
JMMB Group popped 3 cents to $1.94 with investors exchanging 10,820 stock units, Massy Holdings declined 10 cents to $4.50, with 1,588,735 stock units changing hands. National Enterprises ended at $3.60 with an exchange of 100,531 units, Prestige Holdings popped 52 cents to $6.80 after an exchange of 21,661 stocks, Republic Financial rallied $2.10 to $138.50 in switching ownership of 201 shares. Trinidad & Tobago NGL lost 21 cents in closing at $23 while 7,539 units passed through the market, Unilever Caribbean remained at $12.80 and finishing with 1,085 stock units changing hands and West Indian Tobacco ended at $22 in trading 4,724 shares.Prices of securities trading are those for the last transaction of each stock unless otherwise stated.
A total of 46,347 shares were traded for US$3,524 compared with 956,617 units at US$11,129 on Tuesday.
Proven Investments lost 0.44 of one cent in closing at 19.3 US cents as 12,671 stock units changed hands. Sterling Investments dipped 0.03 of a cent to 1.97 US cents with a transfer of 26,126 stocks, Sygnus Credit Investments USD share popped 0.58 of one cent to close at 9.99 US cents in switching ownership of 150 shares and Transjamaican Highway fell 0.02 of a cent to 0.95 of one US cent with 5,048 stock units changing hands.
The All Jamaican Composite Index lost 9,718.27 points to settle at 394,631.15, the JSE Main Index fell 9,089.39 points to settle at 347,149.59 and the JSE Financial Index lost 3.14 points to settle at 82.78.
The PE Ratio, a formula to ascertain appropriate stock values, averages 14.4 for the Main Market. The JSE Main and USD Market PE ratios incorporate earnings forecasted by ICInsider.com for companies with the financial year ending between November and August 2023.
Stock Exchange declined 69 cents to end at $15.30 after exchanging 22,960 units, Kingston Properties dropped 75 cents to close at $7, with 65,635 stock units clearing the market. Kingston Wharves dropped $2.33 in closing at $33.67, with 2,640 shares changing hands, Massy Holdings climbed 45 cents to $79.95 as 74,874 units were traded, Mayberry Investments fell 70 cents to end at $8 closing with 142,781 stocks passing through the market. NCB Financial lost $1.79 in closing at $78.21, with 78,538 units crossing the market, Palace Amusement popped $1 to close at a 52 weeks’ high of $1600 as 267 stock units passed through the market, Portland JSX declined $1.55 to close at $9 as investors exchanged 100 stocks. Proven Investments gained 50 cents to end at $27.50 after exchanging 1,122 shares, Sagicor Group dipped $4 in closing at $51 in switching ownership of 2,788 stocks, Sagicor Real Estate Fund shed 86 cents to end at $8.67 as 11,700 stock units crossing the exchange. 
Scotia Group dipped $1.49 to close at $33 in exchanging 11,506 shares and Stanley Motta increased $1.23 after ending at $5.25 with a transfer of 244 units.
At the close, the Junior Market Index declined 47.01 points to finish at 3,901.24.
Investor’s Choice bid-offer indicator shows three stocks ended with bids higher than their last selling prices and three with lower offers.
Express Catering declined 10 cents to $5.30 after an exchange of 500 units, Fosrich shed 24 cents to close at $3.99 after investors finished trading 511,652 units. iCreate dipped 43 cents to $1.50 in an exchange of 3,234,540 stocks, Indies Pharma fell 25 cents to $2.75, with 12,528 stock units passing through the market, Iron Rock Insurance declined 37 cents ending at $1.98 after 4,000 shares crossed the market. Jamaican Teas fell 10 cents to close at $2.50, with 437,300 shares crossing the market, Knutsford Express advanced 20 cents to end at $8.20 while exchanging 1,815 units, Lasco Manufacturing rallied 36 cents in closing at $4.30, with 14,263 stocks crossing the exchange. Limners and Bards dropped 33 cents to close at $2.43 as investors exchanged 30,090 stock units, Lumber Depot shed 39 cents in closing at $2.30, with 323,510 stock units changing hands, 
Main Event dipped $1.99 to end at $7 after an exchange of 216,945 units. Paramount Trading fell 10 cents to $1.80 with a transfer of 14,333 shares and tTech popped 33 cents to end at $2.53 with investors transferring 33,000 stocks.
Investors traded 515,843 shares for $9,566,779 versus 82,534 stock units at $683,762 on Tuesday.
Massy Holdings gained 10 cents in ending at $4.60 after an exchange of 82,934 stock units, National Enterprises remained at $3.60 with a transfer of 110,404 stocks, National Flour Mills advanced 4 cents to end at $1.54 with an exchange of 1,600 stocks. NCB Financial lost 24 cents to close at $4.50, with 10,300 stock units clearing the market, Prestige Holdings popped 1 cent in closing at $6.28 in an exchange of 9,818 shares, Republic Financial dipped $2.60 to $136.40 and closed with 4,034 units changing hands. Scotiabank dipped 30 cents to close at $78 after a transfer of 90 stocks, Unilever Caribbean ended at $12.80 while exchanging 205 stock units and West Indian Tobacco remained at $22 in trading 4,502 units.
A total of 956,617 shares were exchanged for US$11,129, up from 350,984 units at US$5,053 on Friday.
Sterling Investments lost 0.13 of a cent in ending at 2 US cents in an exchange of 21,168 units and Transjamaican Highway shed 0.01 of a cent to 0.97 of one US cent with an exchange of 933,274 stock units,
