ICTOP15

ICTOP 15 Main & Junior Market stocks for 2024

February 9, 2024 by IC Insider.com

Stocks are set for a major ride higher in 2024 following two years of subpar performance of the Jamaica Stock Exchange. The market did not perform well in 2023, the Main Market fell 8.5 percent and the Junior Market the US dollar market declined by 3.5 percent and 1.2 percent respectively, but technical reading of the Main Market is pointing to a solid rally ahead, with some stocks breaking out of a prolonged period of consolidation.
Bank of Jamaica (BOJ) raised interest rates in 2021 with the overnight rate landing at 7 percent in November 2022 and has remained there since, with BOJ keeping a tight lid on market rates by the use of Certificate of Deposits with rates mostly around 10 percent on average, to tame inflation that peaked close to 12 percent in early 2023.
The stock market has not performed well in that environment. Contrasting that with the US where the Federal Reserve raised rates over two years, with the last increase in July last year. Notwithstanding, the US stock market indices were racing forward and are now at record levels while the JSE Main Market is still below the Covid-19-affected levels but the Junior Market trades at much higher levels than the lows of 2020.
Many investors consider that higher interest rates reduce stock prices, but they are only partially correct. Interest rates affect the valuation of stocks not necessarily the price of stocks. Put another way, higher rates reduce the PE ratios used to value stocks but if profits are rising faster than the increase in rates, stock values will tend to rise as the company is more valuable despite the rate increase. With rising rates the PE ratio mostly used in stock valuation will fall with rising rates and rise when rates are declining.

The Junior Market is presently in a triangular formation that will lead to a big breakout soon.

If profits don’t rise above the level of PE decline then the market will most likely adjust the stock price down. So while interest rates remained stable in 2023 at levels higher than 2021, a total of 31 companies posted gains in the market last year. That is the reason why Scotia Group posted gains from late 2023 into 2024, with some others doing likewise. Other factors to consider are that higher rates may result in higher interest costs for some companies or reduced revenues that could reduce profit but companies with investment funds may enjoy higher profits as they may enjoy increased interest income.
The lack of performance for the Jamaica Stock Exchange last year was not interest rates, but mostly lacklustre profit performance by several companies. What the issue illustrates is the import of careful stock selection with a focus on companies with a good track record of growing profits consistently over several years.
Technical indicators are pointing to a bottoming out of the Main Market that has broken out from a market squeeze, with technical indicators indicating a huge run ahead for the market, see market index chart. At the same time, the Junior Market closed 2023, with a negative undertone that could remain in place for a while until events push it in a new direction. Company profits seem the most likely factor in the medium term.
Part of the decline in the Junior Market in 2023 is due to an overall level of over-exuberance by investors in 2022, pushing the prices of a limited number of Junior Market stocks to unrealistic levels, with sharp correction for some of these in 2023 and helping to drag the market. The situation in the Main Market was somewhat different with a lack of interest from institutional investors until the final quarter of the year which is reflected in a continuous slide in the Main Market Index throughout the year until the end of September, indeed from a two-year high of 461,783 points on the All Jamaica Composite Index in May 2022 until it bottomed at the end of September 2023 at 344,153 points and put on almost 23,000 points to the end of the year. While the Main Market declined for two consecutive years, the Junior Market was experiencing its first yearly decline since 2020.
Inflation moderated during the year within the central bank’s target of 4 to 6 percent on a number of occasions. By the end of November, the year over year inflation rate was just above the bank’s upper limit of 6 percent, with the rate hitting 6.9 percent in December. Certain price adjustments particularly in public transportation impacted inflation negatively towards the latter part of the year, some of these may carry over into 2024. The bank also fears possible wage increases that could be unusually high and place upward pressure on inflation.
For the first three months of 2024, it should be instructive to see where inflation is likely to be and what could become of interest rates during the year. What is clear is that falling market rates in the USA are likely to set the tone ultimately in Jamaica and that should be aided by expectations that the FED will start reducing rates during the second quarter of 2024.
A look at the stock market at this juncture suggests that profits should continue to be positive as can be seen from a compilation of company results for the third quarter of 2023. Data shows that profits for the nine months are up 4 percent and for the quarter up a B 46 percent over similar periods in 2022. A major part of the drag on profits was approximately $11 billion provisions made by NCB Financial for staff redundancies and one-time bonus compensation.
Barring increased interest rates, the Jamaican economy should grow just around two percent in 20224 and that ought to be sufficient to help generate increased demand for goods and services and assist many listed companies to increase profits from existing operations. Expanding companies will see above average performances.
The Junior Market and the Main Market of the Jamaica Stock Exchange are flashing bullish signals that suggest an uptick in the market. This is reflected in projected PE ratios for 2024 for both markets with the projected ratios well below the current levels of valuation for 2023.
The average PE for the JSE Main and Junior Market for 2024 based on that year’s earnings is 10.5 and 9 respectively, compared to the current levels of 14 based on 2023 earnings, at the same time the ICTOP 15 based on 2024 earnings stand at around 5, well below the market average of 14, barring increases in interest rates and disappointing profits, PE ratios should return to the average around 14, resulting in a 180 percent jump in values for the IC TOP15 stocks during 2024 at the minimum, and more if the country’s central bank lowers rates during 2024, with a 50 percent rise in the overall market.
Data for the market in 2023 showed that companies with outstanding profit growth found favour with investors who bid the prices of those stocks higher in most cases. Stocks of companies with profit declining or with moderate profit increases were mostly marked down by the investing public. Examples, are to be found in TransJamaican Highway, Lasco Distributors, Lasco Manufacturers, Dolphin Cove, General Accident, Fontana, Main Event, Knutsford Express and Scotia Group with Wisynco Group to name a few that enjoyed price gains. A number of the performances of these stocks benefited from recovery in the tourism sector directly or indirectly.
For 2024, companies that are expanding may be worth investing in as they are likely to enjoy above-average growth in revenues and profits going forward. Companies in this category include Wisynco, Caribbean Cement, Caribbean Cream, Grace Kennedy, Jamaican Teas, Caribbean Producers, Jetcon, Fontana, Express Catering, Stationery and Office Supplies, Edufocal, Transjamaican Highway, Stanley Motta, and Tropical Battery.

Filed Under: Buy Rated, Feature Stories, Investment 2024, Investment Tips, JSE Combined, Stock Market Tagged With: Access Financial, Caribbean Assurance, Caribbean Cream, Consolidated Bakeries, Dolphin Cove, Elite Diagnostic, Epress Catering, Everything Fresh, Fontana, ICTOP15, Jamaica Stock Exchange, Jamaican stocks, Jamaican Teas, JMMB Group, junior market, Lasco Distributors, Lasco Financial, Lasco Manufacturers, Lasco Manufacturing, Medical Disposables, NCB Financial Group, Sagicor Group, Scotia Group

Boom coming for Junior Market ICTOP15

January 15, 2023 by IC Insider.com

The Junior Market ICTOP15 is set for a significant upward climb over the next 15 months as solid economic growth continues and interest rates pull back in 2023. There will be a considerable uptick in Tourism arrivals for the winter season as the sector delivers record performance as it will have fully recovered from the disrupter to the industry in 2020 and deliver record revenues and profits for several companies.
The Junior Market delivered gains for 31 companies in 2022 but underperformed expectations even as the value of shares traded jumped 130 percent to $16.34 billion in 2022 from just $7.1 billion in 2021.

Junior Market Index showing the market in consolidation mode since November ahead of a breakout.

The value of stocks trading in the first 11 months was higher than the previous year, with only December being lower than 2021. Trading slowed in the last three months, helped by new IPOs that pulled funds from the market. Interestingly, the market did not reflect much adverse reaction to the rise in interest rates in 2022.
In the first nine trading days of 2023, the value of stocks traded on the Junior Market rose 15 percent to $172.6 million, up from $149.8 million over the first nine trading days in 2022, and running well ahead of the last month of 2022. That this is unfolding against the drag of higher interest rates sends a powerful message of what lies ahead for the market. Admittedly, there were just 41 listed companies on the exchange at the start of 2022 compared with 47 in 2023, which is a nearly 15 percent increase, and is running well ahead of the last month of 2022. That the increased trading is happening against the drag of higher interest rates sends a powerful message of what lies ahead for the market—the clearest indicator of a booming tourism industry.
The surest sign that prices are heading higher for the Junior Market is that it currently trades around a PE of 13 based on 2022/23 earnings at the end of 2022, with the top 15 stocks representing 32 percent of the market, with PEsfrom 15 to 35, averaging 21, the average based on 2023/4 earnings is a mere 8.6 times.

This is the clearest sign of a boom time in Jamaica’s tourism industry.

Access Financial – EPS projected $2.65 and $4.25 for 2024.
The company suffered a major profit contraction from 2020 to 2022 due to increased loan loss provisions, the write-off of bad loans, and reduced lending. That seems to be behind them, with loans growing again and loan losses reduced.
Profit after Tax of $133 million for the six months ended September 2022, compared to $180 million for the prior period ended September 2021. This performance reflects a 7 percent increase in Operating Revenues in line with a growing loan portfolio. However, this was offset by a 14 percent increase in Operating costs due primarily to increased loan loss and provisions. Loans written off amount to $76 million, up from $58 million in 2021, while provisions fell from $61 million to $54 million.
Revenues for the September quarter from loan interest rose from $419 million to $446 million, but net fees and commission income on loans slipped from $107 million to $103 million and net profit ended at $55 million from $90 million in 2021.
Loans and advances now stand at $4.76 billion for September 2022, an increase of 9 percent year over year and 5.5 percent since March 2022, and reflecting an acceleration in the pace of lending, which augurs well for the second half, with the December quarter being the most critical period for growth.
The expected strong move in the stock price is expected in the latter part of 2024 with a big pick up in profits, investors should note that active selling in the stock is declining and if that continues, investors who want to buy into the stock will have to buy at increasing prices.

AMG Packaging back in ICTOP10

AMG Packaging Projection – EPS 50 cents for 2023
The company can deliver a gain of 350 percent in the stock price over the next 17 months. This is expected to flow from improvement in operations due to the installation of new equipment that became operational in the second quarter of 2022, allowing for greater efficiency and increased business opportunity. The company should benefit from cost reduction in some areas as prices of some inputs have declined since the 2022 results were released and should help improve profitability. With continued economic growth and restoration of the tourism industry, demand for boxes will grow and add to revenue with some cost reduction, as profit is expected to rise.
The fiscal year ended August produced a 41 per cent increase in revenues of $996 million over the 2021 outturn of $706 million with the fourth quarter rising 31 percent from $197 million to $257 million. Profit grew from $61 million in 2021 to $107 million for the 2022 fiscal year. Of note, operating profit for the fourth quarter increased 79 percent to $29.5 million, much faster than revenues—confirmation of input cost reduction also reflected in a decrease in its first quarter of the new year.
Caribbean Assurance Brokers – Projection EPS 30 cents for 2022 and 50 cents for 2023
The company earned a 10 percent increase in revenues of $432 million in the nine months to September 2022 compared to $392 million for 2021. For the third quarter, revenues rose 6 percent to $237 million over $224 million in the 2021 quarter.
Net profit amounted to $105 million for the nine months, while profit for the September quarter was flat with that of 2021 at $100 million. Expenses were well contained at $324 million for the nine months compared with $308 million to September 2021, but costs rose sharply from $121 million in the quarter to $136 million.
The growth trajectory suggests continued improvement in revenues going into 2023 that should contribute to a rise in profit. Recent financials show a picture of steady growth and there are no signs that will change in the short term, Investors will therefore need to understand how to play this stock in the short to medium term.
Caribbean Cream – EPS 2023 is 70 cents, and $1.30 for 2024
The company performed poorly in 2022, but there are signs in the September quarter results that things are on the mend operationally. After reporting good results for 2021 with a profit of $100 million to February, a slight loss was reported for the year to February 2022 as cost far outstripped growth in revenues—a development that the management never fully combatted.
If the company gets its house in order, it could be a stock to be reckoned with in 2023, despite a poor first half year in 2022 with revenues higher but lower profits than in 2021.
Revenues rose 22 percent to $1.25 billion for the half year to September 2022 compared to $1.03 billion in the previous year and by 33 percent for the quarter to $645 million, up from $486 million in 2021. Gross profit came in at $354 million for the half year, slightly down on the $371 million in the previous year, and the quarter raked in $189 million, a 24 percent increase above $153 million in the last year. While recovering some of the increased direct cost, the company is still not fully back to normal in the second quarter but is ahead of the first quarter. They faced increased prices across the board in various areas, with administrative expenses rising 14.5 percent for the half year and 21 percent in the second quarter, which they could not entirely pass on to the general public.
Notably, the second quarter numbers show an improving position over that of the first quarter and one would expect, all things being equal, the performance to carry over into the second half of the year with the final quarter, which covers the Christmas period, being the best and deliver growth in revenues and profits as a result.
The company continues to increase spending on capital expenditure to improve efficiency further. The financials show fixed assets at $1.35 billion from $858 million at the same time in 2021 and is up from $1.1 billion at the end of February 2022 as the company continues to spend to accommodate increased business activities.

Anthony Chang, Managing Director of Consolidated Bakeries

Consolidated Bakeries – EPS forecast 15 cents for 2022 and 55 cents for 2023.
The company reported impressive half year results that suggest a significant improvement in operations from a 35 percent rise in revenues. The third quarter showed continued strong growth in revenues of 21.5 percent. But that was inadequate to cover costs and resulted in a slight loss of $14.5 million in that period as distribution expenses surged $21 million over the previous year, wiping out more than an $11 million increase in gross profit. The company also suffered a reduction in gross margin in the September quarter, thus compounding the negative effect of increased costs. The December quarter usually delivers greater revenues than the September quarter and is expected to be profitable. With all the improvement in 2022, it is 2023 that should see marked improvement with a broader product range and strong growth in tourism and the local economy. In addition, some of the constraints in 2022 have started to dissipate with improved shipping and reduced cost from the Far East, which should help reduce costs in some areas of the company’s operations.

Dolphin Cove.

Dolphin Cove – EPS is projected at $2.30 for 2022 and $3.50 for 2023.
With the bulk of its income coming directly from the tourism industry, 2023 is going to be an excellent year for the company as the industry bounces back to normal levels that should see growth over 2019., the last full year of normalcy, and jump significantly over the first half of 2022 when the sector had 22 percent less stop over arrivals than in the same period for 2019. Visitor arrivals were up over 2019 in the latter part of 2022, suggesting a likely solid 53 percent jump in arrivals in the 2023 first quarter over that for 2022. The second quarter could equate to a 15 percent increase over the 2022 period and will profoundly impact revenues for the company.
The company stated in their third quarter results that they “ended the third quarter of the year with record financial results, with US$3.9 million in revenue, US$1.6 million more year over year and US$600,000 or 17 percent more, when compared to Q3-2019, which was the year before the pandemic. The flow of visitors to our parks has increased through the year – in Q3-2022, we welcomed double the number of guests in our parks than in Q3-2021 and 25 percent more than in Q3-2019. This is the second quarter with better attendance levels than in pre-pandemic times.”
Elite Diagnostic – EPS is projected at 50 cents for 2023 and $1 for 2024 for the September quarter; revenue increased $47 million from $141 million in the prior year to $188 million. Net profit for the quarter was $5.8 million compared to a loss of $515,000, an improvement of 1,229 percent over the corresponding period in the prior year, but would have been far greater except for increased cost to repair machines and downtime resulting in loss of revenues.
“We continue to record increased revenues in most areas which had significantly declined during the height of the Covid-19 pandemic. However, unforeseen machine downtime during the period under review has negatively impacted our budgetary projections.” The company estimated a shortfall of $25 million in gross revenues due to extensive down time during August and September.
Despite the revenue loss, the latest quarterly results show growth of $176 million over the June quarter, a visible company trend for some years.
The company reported that a branch is slated for Montego Bay in late 2023. The 2023/24 fiscal year could be the breakout for the stock as profits continue to climb upward.
Everything Fresh – EPS is projected at $2.30 for 2022 and $3.50 for 2023
The stock could gain 170 percent in price. The company that sells most of the goods to the tourism sector came off three years of significant losses. Some of which occurred because of the disastrous acquisition by the company. The COVID-19 pandemic impacted the company negatively as the tourism sector was shuttered and only started to come back seriously in 2021 and more so in 2022. This is not the only negative impact the company has overcome in improving the results in 2022. Investors should see even growth over 2019, which was the best period before the pandemic for the sector.
For the nine months to September, revenues jumped 76 percent from $1.079 billion to $1.9 billion and generated a profit of $41 million from a loss of $24 million in 2021. The third quarter recorded revenues of $630 million, a 29 percent increase over $495 million in 2021, and delivered a profit of $9 million from $3.5 million in 2021. Profit for 2022 should end up around 10 cents per share and 35 cents in 2023, with the rebound in the tourism sector giving above average push on revenues. The company benefitted from the bounce in the tourism trade, with much more to come in 2023, as the first quarter will see a big jump in visitor arrivals over 2019 and 2022.

General Accident spreading wings

General Accident Insurance – EPS is projected at 70 cents for 2022 and $1.20 for 2023
For the nine months to September 2022, the company delivered after tax profit of $277 million with the Jamaican operation of General Accident writing premiums of $12 billion and contributing profit before Tax of $297 million. The Trinidad subsidiary registered premiums of $654 million, a 45 percent increase over the $451 million written for the prior year. The Barbados subsidiary wrote premiums of $291 million compared to $214 million for the preceding year. But the company expects the two subsidiaries to be in the black in 2022 and move into profit in 2023.
Investment income for the nine months ended September 2022 was $250 million compared to $148 million in the prior year. Notably, with interest rates trending upwards, there will be increases in consolidated investment income over the short to medium term.
Despite some concerns about the ability to get adequate reinsurance coverage, indications are that General Accident is in a healthy position and is poised to continue to do well and will record increased profits in 2022 and 2023 as operations in Barbados and Trinidad moved from a significant loss in 2021 to profit in 2022. In addition, the stock is an excellent one to hold for long-term investment purposes to benefit from continuous growth and high dividend payments.
Honey Bun – projected EPS of $1 per share for the 2023 fiscal year and $1.85 for 2024
Profit performance for the financial year to September was disappointing, with revenues surging sharply higher but increased cost eroded the revenue gains. It resulted in a mild reduction in profit for the year.
There are developments in the broader world economy that are set to result in cost reduction in some areas in 2023 that should contain cost increases and thus help deliver increased profit for the year.
For the year to August, revenues rose to $2.95 billion from $2.15 billion in 2021 and delivered a profit of $203 million, down from $219 million after taxation of $51 million and $72 million, respectively, and generated earnings per share of 43 cents versus 46 cents in 2021.
The most recent results ended a four-year run of increased profits, as cost pressure negated an impressive 38 percent surge in sales, but revenue growth pales in comparison to a 59 percent jump in raw material cost for the year, amongst other items reflecting major cost movements.
Gross profit margin fell from 48 percent over the last three years to 40 percent, but a combination of price adjustments and reduction in raw material cost should result in an improvement in the 2023 fiscal year. Raw material accounted for 29 percent of sales in 2021 but surged to 37 percent in the latest year, which will most likely be reversed in 2023. Selling and distribution costs rose 17 percent to $408 million from $348 million in the prior year. Administrative expenses jumped 32 percent to $531 million from $402 million in 2021. Depreciation jumped 25 percent to $91 million from $73 million. Staff costs rose 33 percent to $662 million, of which increased employment accounted for a portion as the number of employed persons climbed 7 percent from 219 to 235.
Lasco Distributors’ EPS is projected at 50 cents for fiscal 2023 and 65 cents for 2024
Increasing revenues by 11 percent to $12.9 billion, improving gross margin that rose more than revenues with a growth of 16 percent and cost containment, delivered a 20 percent increase in after tax profits for the nine months to September 2022. This growth should pick up steam in the second half as revenues and profit after Tax climbed faster in the second quarter of the current fiscal year than in the first by 13.5 percent and 33 percent, respectively. The gross profit margin in the second quarter came in at 17.4 percent versus 16.35 percent in 2021. With the Jamaican economy continuing to record growth above forecast with more to come, Lasco is positioned to take advantage of that.
The company lost its appeal against Pfizer and the legal bills for the defendant will have to be met by Lasco, which may not have been provided for in the half year results. This could weigh down profit in the third quarter, but the effects will be behind them for the 2024 results.
Lasco Financial – EPS is projected at 50 cents for fiscal 2023 and 90 cents for 2024
Revenues rose 12.5 percent to $623 million for the second quarter of 2022 from $554 million in 2021. According to the company, “the increase in income is largely due to the general increase in business transactions. Profit for the three months also exceeds 2021-2022 by $24.7 million, closing at $154 million. Revenues for the six months amount to $1.19 billion, an increase of just 3.7 percent increase over the prior year. For the six months under review, total expenses increased by 5 percent from $857 million to $900 million. The company stated that the administrative expenses increased in line with the expansion of services and growth.”
Profit after Tax for the six months rose 17 percent to $157 million, over $134 million generated in 2021, while the quarter ended at $74 million, 26 percent above the $59 million in 2021.
With the December quarter being one of their biggest for revenues and profit, they should enjoy a bounce in the final quarter of 2022. Although not cast in stone, performance for the current fiscal year is well indicated from the results to date; as such, the next fiscal year is all important.

Lasco Manufacturing – EPS is projected at 60 cents for fiscal 2023 and 80 cents for 2024
After languishing in the doldrums for three years, the company reminded investors that they are not dead and are roaring back to deliver decent growth in revenues and profit for the current fiscal year and into the next. ICI nsider.com expects that the stock that traded as high as $6 in 2021 will surpass this level sooner than later and deliver a handsome gain.
Profit growth accelerated 23 percent for the three months to September to $469 million from $380 million in 2021 and from a rise of 13 percent in the six months to September 2021 from $782 million to $883 million in 2022. Gross profit margin fell in the first quarter to 34 percent but rebounded to 37 percent in the second quarter, bringing the year to date margin to 36 percent compared to 37 percent the previous year, suggesting importantly, the company has now restored the margins to 2020 levels.
Revenues also accelerated 22.6 percent in the second quarter to $2.87 billion from $2.33 billion in 2021, from a growth of 17.5 percent for the six months to $5.47 billion from $4.66 billion. Gross profit rose 18.4 percent to $1.07 billion in the quarter from $870 million in 2021 and climbed 15.3 percent to $1.97 billion for the six months compared to $1.71 billion in 2021.
Operating expenses rose 18.5 percent to $378 million in the 2022 September quarter versus $319 million in the comparable quarter in 2021 and 10.75 percent to $690 million for the six months to September 2022 versus $623 million last year.

Paramount Trading logo

Paramount Trading – EPS projected at 35 cents for fiscal 2023 and 50 cents for 2024
The stock can deliver gains of 465 percent over the next 18 months, making it an attractive, undervalued candidate for acquisition with a view of picking up handsome gains.
A classic turnaround case that pushed the stock up 59 percent in 2022, with more to come in 2023 as profit continues to grow.
The company was poorly impacted by the closure of businesses in the country with the advent of the Covid-19 pandemic, resulting in reduced revenues and profit for the 2021 fiscal year. But it enjoyed a 19 percent bounce in revenues in 2022, with profit jumping to $174 million. It followed that up with a 61 percent increase in revenues for the August quarter, with profit growing to $85 million in 2022 from $19 million. Second quarter results show continued improvement in profit from revenues that climbed 50 percent in the November quarter to $601 million and 55 percent for the half year to $1.2 billion ahead of the 2021 period. Profit surged 126 percent to November quarter to $65 million and 212 percent for the half year to $149 million.
The latest two quarterly numbers send a positive message about the likely outcome for the 2023 performance and beyond.
Tropical Battery – EPS projected at 30 cents for fiscal 2023
The total recovery of the tourism industry is set to propel growth in the wider economy above normal levels in 2023, thus providing increased spending that should boost sales and profit for Tropical. The company had an outstanding 2022 fiscal year, with profits soaring 127 percent over 2021 from a 31 percent rise in revenues over 2021 to $2.63 billion from $1.997 billion in 2021. In addition, the company is raising capital to fund an acquisition that should add to income and profit.
ICInsider.com projects earnings of 30 cents per share for 2023, with the price moving towards a $5 to $6 region during the year.

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Filed Under: Investment 2024, Investment2023, JSE Junior Market, Stock Market Tagged With: AMG Packaging, Consolidated Bakeries, Dolphin Cove, Emerging markets, Emerging Stock, General Accident, Honey Bun, ICTOP15, Jamaica Stock Exchange, junior market, Knutsford Express, Lasco Distributors, Lasco Financial, Lasco Manufacturing

Jamaica Stock Exchange poised for solid gains in 2023

January 5, 2023 by IC Insider.com

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.

Filed Under: Buy Rated, Feature Stories, Investment2023, JSE Junior Market, JSE Main Market, Stock Market Tagged With: Caribbean Producers, Dolphin Cove, Emerging markets, Everything Fresh, Express Catering, ICTOP10, ICTOP15, Investment 2023, Jamaica Broilers, Jamaica Stock Exchange, Jamaican stocks, junior market, Wisynco Group

Profit surged 533% in Q2 at Paramount

January 23, 2022 by IC Insider.com

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Profit surged 533 percent in the 2021 November quarter, at Paramount Trading, to $29 million from just $4.5 million in 2020 after tax, but profit for the six months to November, popped by a much slower 141 percent to $48 million from $20 million in 2020. Notwithstanding the growth in the second quarter, the company is far from the profit made in the 2016 fiscal year of $173 million, with an average quarterly profit of $43 million.

Paramount Trading

Sales revenue jumped 30.8 percent for the quarter, to $401 million from $307 billion and climbed 15 percent for the half year, to $770 million from $669 million in 2020.
With profits hitting $101 million in 2017, the company has suffered since, with profit dropping to $53 million in 2020, rising in 2021 to $64 million. The current year seems on track to better the 2017 performance based on results to date.
Gross profit rose 30 percent in the November quarter to $130 million from $100 million in 2020, but just 11 percent for the half year, with $241 million realized versus $216 million in 2020. Gross profit margin slipped in the first half of the year, to 31 percent from 32 percent in 2020 and declined in the November quarter to 32 percent from 33 percent in 2020.
Administrative expenses rose 5 percent to $91 million in the quarter and increased just 3 percent in the six months to $181 million. Marketing and sales expenses fell 19 percent to $3 million in the quarter but rose 8 percent for the half year to $5.6 million while Finance cost rose 6 percent in the quarter to $13.4 million from $12.7 million in 2020 but fell 6 percent in the half year from $25.8 million to $24.3 million.
According to the company’s Chairman, Radcliff Knibbs in his report to shareholders on the half year results, “Paramount’s improved performance was achieved by employment of a robust growth strategy.” He went on to state, “we will continue to pivot our operations to take advantage of any possible opportunities that may arise.” He concluded that “we expect that our strategic objectives will be realized through strong income growth and cost containment.
Gross cash flow brought in $75 million but after addition to fixed assets and repayment of loan, the net cash position ended at $41 million, pushing cash resource to $302 million at the end of November. Shareholders’ equity stood at $844 million with long term loans at $454 million and short term at $47 million. Current assets ended the period at $948 million inclusive of inventories of $468 million, receivables of $346 million, cash and bank balances of $124 million. Current liabilities ended the period at $437 million. Net current assets ended the period at $511 million
Earnings per share came out at 2 cents for the quarter and 3 cents for the year to date. IC Insider.com is forecasting 12 cents per share for the fiscal year ending May 2022 and 20 cents for 2023. The stock that is now added to IC Insider.com TOP15 list at 11^th position, traded at $1.37 on Friday, up 44 percent from a low of 95 cents in 2021 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 11 times 2022 earnings and 7 times 2023 projected earnings. Net asset value is 55 cents with the stock selling at 2.5 times book value. The stock price has clearly broken the long term declining trend but faces some short term resistance now around $1.40, but the recent results could well allow it to break free of that level.
The company paid a dividend of 4 cents in January 2021 and again in January 2022 amounting to $62 million.