Use PE ratio to make big bucks

March 14, 2019 by

Investors can improve return on their stock market investment by just following one critical measure, the PE ratios of stocks. Buy low PE ratio stocks and sell those that are too high relative historical norm that almost a sure recipe for making good money in the stock market.
An important factor worth noting is that the PE ratios based on 2018 earnings are well ahead of those for 2019 earnings. The average PE of stocks listed on the Jamaica Stock Exchange based on 2018 earnings is just under 19 times, reflecting valuation as high as 60 times 2018 earnings, with some with PEs in single digits.
The Junior Market boast average PEs around of 17, while the main market is at 19.5. The Junior Market typical PE hoovers around 16 while that of the main market is around 15, all based on 2018 earnings. The typical PE is where a large number of stocks are clustered.
While many investors see stocks as cheap, based on price, that is not the basis of investing in a stock. The focus on the PE is most critical. It is the tool used by most investors to determine if a stock is worth having or not. Many individual investors consider NCB Financial as expensive at

Chart showing falling interest rates & rising PE ratio of the Jamaica Stock Market.

$145, but with a PE ratio of less than 10 times 2019 earnings, suggest otherwise. PEs based on current year’s estimated earnings, are just 10 for the Junior Market and 14 for the main market, with the typical average of 12 for the main market. Should economic factors remain relatively stable, as they current are in Jamaica, as well as globally, the PEs based on 2018 earnings, are indicative of good gains in stock prices in 2019. The above would equate to the junior stock posting gains of 60 percent by next year March and the main market 25 percent.
Investors can compare, the current PE based on 2019 estimated earnings of each stock against the typical ones based on 2018, to get a picture of which ones are likely to gain strongly this year. IC Insider.com daily stock market report charts carry projected earnings and current PE for each stock that investors can use as their tool for identifying stocks with above average potential gains.

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Market Watch still on Scotia

March 11, 2019 by

Scotia Group January 2019 first quarter results due this week.

The main and Junior markets of the Jamaica Stock Exchange pulled back in the holiday shortened week as investors continue to digest and react to some mixed results for 2018.
Scotia Group did not released this past week as was done in 2018. The 2019 result is expected this week, this is one that is to be watched keenly and investors would be smart to keep an eye on the most critical signal that it will send for increased profits for this year. It must show meaningful  growth in the loan portfolio, to start pumping up profit. Caribbean Cement closed at $51.02 and should move higher with limited supply on offer and an analysis of the audited 2018 results suggesting that cost should decline sharply in some areas and revenues rise in the current year. IC Insider.com again revised earnings, this time to to $7 for the year. Last year, cement import cost more than $1 billion, that cost will not recur this year, they will also benefit from a full year of the removal of the expensive lease cost resulting full year’s saving from the $2 billion annual savings, resulting from owning the kilns rather than leasing. Radio Jamaica climbed to $1.15 late last week but there is not much selling at these levels.
Jamaica Stock Exchange pulled back during the week to $14.80 and seems poised to slip some more before settling down, ahead of the 2019 first quarter results that is expected to show a big increase in profit if the data of trading values are anything to go for 2019 to date. Grace Kennedy reported improved results with earnings per share of $5, helped by a big increase in investment income and foreign exchange should be priced higher than the $60.80 it last traded at.

Buying of Fontana was strong on Friday.


Buying came in for Fontana last week pushing the price the price to $4 on Friday and could move higher during the coming week. Wisynco continues to trade around the current price just below $12 and seems poised to continue to move side wards for a while. Watch Elite Diagnostic that has been steady around $3.20 but with good buying interest at the current price level but sellers are reluctant to come off the $3.40 offer price.
Buying for General Accident continues to trade around $4.50 level with no clear signs when it will the break out to a higher price level as there have been selling around these levels and that may well continue for a while.
Lasco Financial remains stuck around $4.60 price level with some selling taking place at $4.60, but buying is not strong enough to move the price in the short term. Medical Disposables bounced last week but the price may bounce around for some time in the medium term. Caribean Cream seems poised to move higher with a gap that has developed between buying and selling interest. Express Catering this one could see huge benefits from the big double digit increase in tourist arrival this year so far, with January up 11.3 percent islandwide. Stationery and Office Supplies dropped to $7 from more than $8 but there are signs of a bounce. Barita Investments announced an interim dividend of 82 cents per share, this news could well lift demand for the stock.

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Cement tops main market TOP 10

March 10, 2019 by

Caribbean Cement is now IC Insider.com TOP 2019 main market stock.

Grace Kennedy moved up in price to $61 and is now at 13 spot, while Pulse Investments price slipped to $2.50 and moved into the TOP 10 main market stock list, replacing Grace. There were no movements in or out of the Junior Market TOP 10 listing.
IC insider.com revised Caribbean Cement earnings to $7 per share since the last report resulting from a reassessment of the amount expended on importing cement in 2018. Import of cement which cost more than $1 billion in 2018, is not expected to recur in 2019. That moved it to the top of the main market stocks. Earnings per share for General Accident was lowered to a more conservative 60 cents even though it could exceed that level, with the December 2018 quarter showing a 44 percent increase in gross premium income over the 2017 quarter, almost twice the 23 percent increase for the full year. If growth in the last quarter were to carry through in 2019, then a higher bottom-line can be expected. The earnings downgrade moved the company to the 10th spot on the list.
The three leading Junior Market stocks are Iron Rock with potential gains of 300 percent, Paramount with potential gains of 281 percent and Caribbean Producers 258 percent.
The three leading main market stocks are, Carib Cement is back on top with potential to gain 174 percent for the year followed by Victoria Mutual Investments with 173 percent likely gain and Sterling Investments with 167 percent.
The main market closed the week with the overall PE at 13.6 and the Junior Market at 10.2. The PE ratio for Junior Market Top 10 stocks average 6.3 and the main market PE is now 8.2. These levels point to the huge upside for the TOP 10 stocks over the next 12 months.
The TOP 10 stocks now trade at an average discount of 40 percent to the average for the Junior Market Top stocks and 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 as new information is received that can result in changes in and out of the list.

This report is compiled by persons who may have interest in the securities commented on.

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Kremi and LasM in IC Top 10

March 6, 2019 by
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Profit for Stationery and Office Supplies fell well below expectations for 2018, resulting in a downward revision to the 2019 estimate to 75 cents per share that is not good enough to keep it in the TOP 10.
tTech rose to $6.20 to exit the TOP 10 Junior Market stocks. Caribbean Cream and Lasco Manufacturing moved into the list. There are no changes to the main market listing this past week. IC insider .com upgraded Caribbean Cement earnings to $6 per share helped by cost reduction and discontinuation of importing cement that is more costly than the local product.
The three leading Junior Market stocks are Paramount, with potential gains of 281 percent General Accident, with potential gains of 256 percent and Caribbean Producers 256 percent.
The three leading main market stocks are, Victoria Mutual investments with 162 percent likely gain, Radio Jamaica 148 percent and Sterling Investments with 147 percent and Sagicor Group with likely gain of 125 percent. Strong gains in the price of Carib Cement pushed it down to number 4 from 2 last week following strong increased profit for 2018.
The main market closed the week with the overall PE at 13.7 and the Junior Market at 10.6. The PE ratio for Junior Market Top 10 stocks average 6.4 and the main market PE is now 8.5.
The TOP 10 stocks now trade at an average discount of 40 percent to the average for the Junior Market Top stocks and main market stocks trade at a discount of 38 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.

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Market Watch on Scotia

March 4, 2019 by

The main market of the Jamaica Stock Exchange moved within less than 5,000 points of the record close in November last year as investors pushed the prices of some stocks higher during the past week.
Based on the date the first quarter results for Scotia Group was released in 2018, the 2019 results should be released on Thursday but so far the company has not posted the date of dividend consideration  that is normally the date of announcing the results. Caribbean Cement closed at $55 and should move higher with limited supply on offer and an analysis of the audited 2018n results suggesting that cost should decline and revenues rise in the current year. IC Insider.com raised earnings to $6 for the year with the expensive $1 billion cement import last year not recurring this year and the benefit of a full year of removal of lease cost with added saving this year from the $2 billion annual savings from resulting from owning the kilns rather than leasing.  Keep on watching this one for a break out in price.
Radio Jamaica pulled back to $1 late last week but there is buying at those levels and above.
The Junior Market is consolidating with a slight negative bias, even as this market seems far more undervalued than the main market, the release of quarterly profit results is not helping this market currently as investors wait to see what 2019 results will look like.
Last week, a number of results were released but they showed that investors may have pushed prices to their limit already. Jamaica Stock Exchange report big increase in profit for 2018 of $413 million versus $221 million in 2017 with earnings per share of 59 cents and thus pushing the PE ratio to a rich 30.  Berger Paints profits were flat but the company had a blowout final quarter with revenues jumping 155 percent from the poor 2017 quarter and profits of $130 million versus just $30 million in 2017. Grace Kennedy reported improved results with earnings per share of $5, helped

Grace new HQ close to the end of construction in downtown Kingston

by a big increase in investment income and foreign exchange. Jamaica Producers earnings grew 23 percent to 73 cents per share and resulting in one of the higher valued stocks on the market. Mayberry Investments reported a loss of $6million after tax for the year with a big increase in credit loss and investment impairment provisions. Sagicor Group and PanJam Investment full year’s results are delayed.
Fontana’s and Wisynco continues to trade around their current prices just below $4 and $12 respectively and seem poised to continue to move side wards for a while.
Elite Diagnostic moved up to $3.20 last week with good demand at that level continues to trade around $3.10 with a gap developing between the bids at $3.10 and sellers at $3.40. Will buyers move higher or will sellers come down where the majority of buyers are?  Watch to see how this develops.
Buying for General Accident continues to trade around $4.50 level with no clear signs when it will the break out to a higher price level.
Lasco Financial remains stuck around $4.60 price level with some selling taking place at $4.60, but buying is not strong enough to move the price in the short term.  Medical Disposables bounced last week but the price may bounce around for some time in the medium term.

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Cement & RJR on watch alert

February 25, 2019 by

Carib Cement could earn $5.30 in 2019.

The action on the Jamaica Stock Exchange is focused on the main market currently as it continues to exhibit clear bullish signs, that propelled by a recent wedge formation and is also being steered upwards by a long term upward sloping support line, that goes
back to early 2016.
The main market is just 9,625.14 points away from the peak
reached of 433,307.22 points reached on 29-Nov-last on the All Jamaica Index. The Junior Market is consolidating with
a slight negative bias, even as this market seems far more undervalued than the main market.
This week investors will see a series of releases with some expected to move the prices of some of the companies. The stocks in this
category to watch keenly are Jamaica Stock Exchange that should report a doubling in profit for the 2018. Berger Paints, Grace Kennedy, Jamaica Producers, Mayberry Investments that should show the full impact of the new accounting standard that will book all investments gains or losses directly to regular profit and loss, Sagicor Group, PanJam Investment. Release of full year’s results for Caribbean Cement last week, provided fuel that drove the price up to $51.50. Supply of the stock is low, with profit prospects for 2019 looking good.
Last weeks’ release of Fontana’s half year results, were mixed, with slightly higher profit for the six months but lower profit for the December quarter, the latter from modest sales increase, halted the advance of the price of the stock. The stock is likely to trade around the $4 level for a while. Investors ought to be focusing on the expansion plans and what that will do to profit in fiscal 2020. Wisynco continues to trade around the $12 mark but could break out at any time demand existing to buy just below $12 and supply drastically reduced compared to the period before the company released six months results.
Demand remains high for Buy Rated Radio Jamaica but supply has virtually dried up and so the stage may be set for higher prices ahead. The price moved up to $1.40 during last week but pulled back afterwards to trade back at $1 on Friday before heading back to close at $1.25.
Elite Diagnostic continues to trade around $3.10 with a gap developing between the bids at $3.10 and sellers at $3.40. Will buyers move higher or will sellers come down where the majority of buyers are?  Watch to see how this develops.
Buying for General Accident continues between $4 and $4.25, when will the break out takes place is unknown, but the valuation suggest that it could be sooner than later as the company is expected to build on the 2018 results of 29 cents per share in 2019.
The price of Lasco Financial rose during the past week but the price could inch higher this week but investors may not be ready push it much higher in the short term
Medical Disposables bid at the close on Friday was $5.50 with offer at $6.49, a wide gap that will close at some time. The company’s expansion into consumer products offers scope for a faster growth in profit going forward and that swill help the stock in the latter half of 2018. The latest results show, it is going take sometime for the expected growth to really take hold.

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Seprod & Sygnus jump IC Top 10

February 24, 2019 by

Seprod after climbing from $34.85 at the end of the first full week in February to $39 in the week following, the price made more gains this past week, to end at $48 and dropped out of the TOP 10 main market listing.
Another main market stock, Sygnus Credit Investments garnered increased buying interest after the company posted positive December quarter results and moved back to the 2018 IPO price of $13.72 to leave the TOP 10. Grace Kennedy and Stanley Motta moved in to fill the breach left by the above two companies.
Caribbean Cream and Jamaican Teas entered the TOP 10 last week but left the list, by the end of this past week. Also moving on, was Lasco Manufacturing. Entering the Junior Market TOP 10 are tTech, Main Event with the price dropping to $5 and Iron Rock with the price declining to $3.50.
The three leading Junior Market stocks are General Accident, with potential gains of 300 percent, Paramount Trading with potential gains of 281 percent but not likely until the second half of 2019 when the company starts releasing the 2020 fiscal year results and Medical Disposables with 263 percent projected gains.
The three leading main market stocks are, Victoria Mutual investments with 153 percent likely gain, Sterling Investments with 135 percent and Sagicor Group with likely gain of 125 percent. Strong gains in the price of Carib Cement pushed it down to number 4 from 2 last week following strong increased profit for 2018.
The main market closed the week with the overall PE at 13.9 and the Junior Market at 10.2. The PE ratio for Junior Market Top 10 stocks average 6 and the main market PE is now 8.7.
The TOP 10 stocks now trade at an average discount of 41 percent to the average for the Junior Market Top stocks and main market stocks trade at a discount of 38 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.

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Flat profits at Jamaican Teas

February 22, 2019 by

Jamaican Teas

Domestic sales at Jamaican Teas was robust for the first quarter to December last year, with a 16 percent increase in both the manufacturing operation and at the company’s sole supermarket. Exports fell sharply and pulled down overall sales.
JTL’s first quarter revenues from manufacturing operations declined by 10 percent, due mainly to a stock reduction exercise at the main USA distributer, resulting from export sales declining 40 percent, following a very strong 67 percent increase in the first quarter of 2018 fiscal year and a 24 percent increase for the full fiscal year. The group had no sales of houses in the period as the sole scheme that was developed was completed. Sales generated from the property development in the 2017 quarter of $48 million.
The decline in export sales in the December quarter negatively affected results for the quarter for the group. Nevertheless, the Group’s first quarter net profit attributable to the owners slipped 4 percent, from $52 million to $50 million.
The Company is reporting pick up in exports following the closure of quarter, as well as local sales in both the manufacturing and supermarket operations. With the prices of certain stocks rising since December, the group should be enjoying gains in their equity portfolio.
Earnings per share per share from continuing operations finished at 7.3 cents, down from 7.7 cents in 2017.
For financial year commencing, October 2018, the Group adopt the new accounting standard IFRS 9, resulting in all realized and unrealized gains on listed equities becoming part of the profit and loss account.
The Group continues to enjoy improving financial health with equity capital of $1.4 billion and borrowed funds of just $178 million. The quarter ended with combined quoted investments at $454 million, up from $319 million in the previous year and net cash on hand equaled $132 million.
Jamaican Teas is listed on the main market of the Jamaica Stock Exchange and last traded at $4.
Persons connected with IC Insider.com are associated to the company.

Filed Under: Company News, Company Results Tagged With: , , ,

Fontana & Wisynco jump IC Top 10

February 18, 2019 by

Fontana Waterloo Road branch now new completion.

There were some major price movements for the TOP 10 stocks. By the end of the week, Fontana moved up in price to $3.95 and moved out of the list.
ISP Finance closed with the bid at $13, forecasted earnings was adjusted down to $1.65 for 2019, with the stock existed the TOP 10. Caribbean Cream and Jamaican Teas replaced the above two companies.
TOP 10 main market selection last week, Wisynco closed the week at $11 and that was enough to move it off the list with Carreras moving back on to the list. Radio Jamaica made a big surge from 80 cents to end the week at $1.20 but with the offer at $1.18 after the company posted strong gains in profit in the December quarter of $168 million versus $79 million in the similar period in 2017. Seprod also enjoyed a big move from $34.85 to $39, both remain in the TOP 10.
Stocks falling out of the TOP 10 should not be ignored, they have much more gains ahead of them, in 2019. Both Fontana and Wisynco earnings are based on June 2019 year-end. Results for the 2020 year will start coming out before the end of this year and could result in increased interest in the stocks.
Medical Disposables fell in price during the week and rose in the TOP 10 to number 2 while Sygnus Credit Investments garnered increased buying interest with the price moving up with the stock just holding on to the number 10 spot on the main market list.
The three leading Junior Market stocks are General Accident, with potential gains of 300 percent, Medical Disposables with 264 percent projected gains and Stationery and Office Supplies 245 percent.
The three leading main market stocks are, Victoria Mutual investments 150 percent likely gains, Caribbean Cement with likely gains of 150 percent and Sterling Investments with 135 percent.
The main market closed the week with the overall PE at 13 and the Junior Market at 10. The PE ratio for Junior Market Top 10 stocks average 6.2 and the main market PE is now 8.4.
The TOP 10 stocks now trade at an average discount of 38 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 35 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.

 

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Fontana & Wisynco watch alerts

February 18, 2019 by

A close look at the main market shows clear bullish signs, with the market breaking out from a wedge formation and is being steered upwards by a long term upward sloping support line, that goes back to early 2016.
Unlike the rally in December that was dominated by NCB Financial, this rally is more broad based. Over the past two weeks, several company released results and seem to be stirring investors’ interest in a number of the companies.
Fontana and Wisynco were highlighted last week, as compelling stocks to watch. Demand for the two stocks drove prices higher on strong demand and increasing traded volumes, during the past week.
These two stocks remain on the watch list and IC Insider.com expects to see continued demand for them. Importantly, the supply of Wisynco’s shares is drastically reduced, since the release of the December quarterly.  There are further reports that apart from a likely big new distribution contract that being discussed the company will be distributing sugar for a factory in the western end of the island.

Radio Jamaica

Buy Rated Radio Jamaica was struggling below the 90 cents mark for a very long time, came to life during the week with the company reporting strong gains in profit in the December quarter of $168 million versus $79 million in the similar period in 2017. The stock traded several million units below 95 cents but hit $1.20 on Friday as supply below dried up. The stock may find it difficult the move higher during the coming week but is worth watching to see where it trades during the week.
A block of nearly 61 million AMG Packaging shares traded during the week and stopped the price from moving higher. Buying interest remains as many investors see prospects of continued profit and stock price.
Elite Diagnostic closed the past week at $3.10 as results released showed a big improvement over the first quarter to September of $5 million versus $1.6 million on a pretax basis. The reported profit was not good enough to excite investors looking for immediate stock price gains.  The price may well remain anchored around current levels for a while. The quarter over quarter growth in revenues points to higher revenues in the March quarter. There now appears to be a gap developing between the bids at $3.10 and sellers at $3.40. Watch to see how this develops. PanJam Investment traded as high as $82 on Friday with limited supply of the stock offered for sale. This one seems poised to move higher as just limited supply of the stocks is on offer for sale.
Demand for Fontana shares ate away at supply of the stock during the week but seems to have the $4 mark to take out before moving higher.

Section of Fontana Waterloo road branch now under construction.

The stock is still undervalued, even as it has doubled the IPO price. Investors ought to be focusing on the expansion plans and what that will do to profit in fiscal 2020.
General Accident 2018 results came out in the region of 29 cents per share but with $129 million less investments income and a big bump up in Management fee expense of 40 percent to $803 million. Importantly, net premium income rose a strong 28 percent for the full year. Selling pressure may be easing up with buying picking up.
ISP Finance reported flat profit for the year to December but revenues rose 18 percent in the last quarter over that of 2017 driving profit in the quarter 30 percent to $25 million. The results was strong enough to drive the bid above the last traded price and push selling of the stock on to the sideline. The growth in the final quarter of 2018 points to improving fortunes for the company and so could ignite demand for the stock at a higher price than the closing bid of $13.
Jamaica Stock Exchange shares hit a new high of $17.95, during the past week, with increasing interest shown in the stock. Exposed supply is currently not high, with expected continued buoyancy in the market and a big increase in new listings this year, investors seem more aggressive to buy into what should be another year of increased profit for the company. Seprod’s price moved up to $39 with increased demand for the shares continuing against the background of declining supply. The price seems poised to move even higher in the coming weeks as the stock remains attractively priced and in limited supply.

Some of Seprod”s products.

Lasco Financial came out with powerful December quarter profit that rose 95 percent to $107 million after tax but a still respectable 67 percent before tax. Nine months profit rose by a much slower 21 percent from $222 million to $268 million after tax but a slightly heathier 23 percent before tax. The December quarter has sufficient information that investors can use to determine what future prospects are for profit and that could help lift demand for the stock.
NCB Financial remains on the Watch List with strong gains in operating profit for the December quarter, but the stock is finding it hard to break through resistance at the $150 level and may need something out of the ordinary if the price is to move decidedly higher before the summer months.

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