Stocks to Watch This week

NCB Financial Constant Spring Road.

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

Scotia Group eases into IC Top 10

Scotia Group could see strong growth in 2019 profit.

The big news this week is the entry of Scotia Group to the main market TOP 10 with a fall in the price to $50 at the close of the week. Based on IC Insider.com forecast, Scotia is set to earn around $4.60 for the 2018 year to October with the PE at just 11 times earnings.
Scotia replaced Berger Paints that was merely squeezed out to sit just outside the TOP 10 at the number 11 spot. Top 10 list movements were modest for the past week, following the previous week of volatility. In the Junior Market, Honey Bun sneaked into the TOP 10 by easing out Jamaican Teas in the process.
Scotia Group, reported flat profits for the nine months from normal ongoing operations. Gains from sales of Credi Scotia and exceptional foreign exchange gains in the July quarter push profit up well above that of 2017. Importantly, the best indicator going forward for increased profitability, is growth in loans. During the July quarter loans grew a strong 3.7 percent between April which works out at an attractive 15 percent per year that should equate to 25-30 percent profit growth in 2019 if the trend continues.
The main market closed the week with the overall PE slipping to 15.3 from 15.6 from the previous week, the PE of the Junior market remained unchanged at 5.5 from the prior week.
The PE ratio for Junior Market Top 10 stocks average 9.3 and the main market PE is now 9.7.
The TOP 10 stocks now trade at an average discount of 40 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings. The main market stocks trade at a discount of 37 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.

Just one change in IC Top 10

Changes in IC Insider.com Top 10 list were modest for the past week which followed a previous week of volatility.
tTech moved back in price to $6 from $5 and moved out of the Junior Market TOP stocks to be replaced by Caribbean Producers that fell to $6 from $6.80 at the end of the previous week. These were the only movement in and out of the TOP 10.
Investors should keep an eye open for former Top stock, NCB Financial that should be releasing full year results and announcing final dividend for 2018, on Thursday
The main market closed the week with the overall PE slipping to 15.6 from 15.4 from the previous week, the PE of the Junior market moved up to 15.4 from 15.4 at the close of the prior week.
The PE ratio for Junior Market Top 10 stocks average 9.2 and the main market PE is now 9.9.
The TOP 10 stocks now trade at an average discount of 41 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings. The main market stocks trade at a discount of 37 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.
There will be no Market Watch report for this week.

Shake up in IC Insider Top 10

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Volatility was the order for the Jamaican stock market for the past week as the market indices bounced around as declining stocks were plentiful as the Junior Market ended with three changes and the main market two.
The Junior Market lost Access Financial that closed the week at $49 from $45.50 to start the week. Iron Rock Insurance that climbed to $4.82 from $4.50 and Lasco Manufacturing that inched up to $3.60 from $3 exited as well. Coming into the Junior Market TOP 10 are Elite Diagnostic, Dolphin Cove and Lasco Distributors.
Caribbean Cement reported third quarter results with lower profit for the nine months than for 2017 but foreign exchange losses was the main factor. The exchange rate has now reversed and that should turnaround the negative impact by the end of the year, nevertheless IC insider.com downgraded full year earnings to $3.53 per share, resulting in the stock dropping out of the main market TOP 10 along with JMMB Group that rose back to $34 from $32. The moves allowed Barita Investments that fell to $18 and Salada Foods that slipped to $21.50 to re-enter the top list.
The main market closed the week with the overall PE slipping to 15.4 from 16 from the previous week, the PE of the Junior market moved up to 15.4 from 16.4 at the close of the prior week.
The PE ratio for Junior Market Top 10 stocks average 9.1 and the main market PE is now 9.6.
The TOP 10 stocks now trade at an average discount of 41 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings. The main market stocks trade at a discount of 37 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.
There will be no Market Watch report this week.

Iron Rock’s first profitable quarter

Iron Rock hits 52 weeks’ high of $4.07 on Friday.

Improvement in its bottom-line of Iron Rock Insurance continued into the September quarter, with profit of $1.1 million, the first quarterly profit in its short history. For the nine months’ period, the company suffered a loss of just $7.6 million down from $60.4 million in 2017.
For the quarter, gross premium income (GPI) increased to $99.4 million from $83.9 million in 2017 with net premium written of $41 million and net earned premium of $48.3 million. For the nine months of 2018, GPI grew 48 percent to $382 million, up from $257 million in 2017 and net earned premium increased 272 percent to $129 million from just $47 million in 2017.
Operating expenses inched up to $36.5 million in the quarter from $35 million in 2017 and grew 11 percent to $111 million from $100 million in 2017. Insurance claims jumped to $23 million from $12 million for the quarter and $61 million for the nine months, from $34 million last year.
Other income totaled $13.5 million for the quarter, from $10 million previously and $35 million for the period to September, versus $24 million. The company is projected to end the year with an overall profit.
Shareholders’ equity now stands at $525 million, down from $512 million at the end of September last year. Cash and investments now amount to $617 million, while Insurance liabilities, claims and other payables amount to $373 million.
The stock now trades on the Junior Market of the Jamaica Stock Exchange at $4.80.

Major shake up in Junior Market Top 10

The Junior market tumbled 5 percent during the past week and shook up the TOP 10 stock list resulting in Caribbean Cream that fell out of the list last week coming back in along with tTech, Jamaica Teas and Lasco Manufacturing with a fall in price to $3, also returned to the TOP list.
Medical Disposables moved up in price from $6.50 to $7.20 at the end of the week to exit the TOP 10. Honey Bun inched up in price and was eased out and so was Dolphn Cove that moved into the list last week and Lasco Distributors this past week. In the main market Barita Investments hit a new high during the week and moved on to be replaced by JMMB Group that closed the week at $32 after opening at $35.01.
Iron Rock moved back into the TOP 10, last week reported a small profit of $1 million in the third quarter, up from a loss of $14 million in the 29017 third quarter and a loss of $7.6 million for the nine months versus a loss of $60 million in 2017. Caribbean Cream fell at the end of the week to $5 is now showing potential gains of 160 percent and follows Paramount with 173 percent, that reported lower first quarter profits of $7 million compared to $34 million in 2017, from increased revenues but with a foreign exchange loss eating up $18 million of the 2018 income. In the main market Caribbean Cement with potential gains of 120 percent leads the main market stocks in attractiveness, followed by Wisynco with likely gains of 114 percent.
The main market closed the week with the overall PE slipping to 16 from 16.3 from the previous week, the PE of the Junior market moved up to 16.4 from 15.8 at the close of the prior week.
The PE ratio for Junior Market Top 10 stocks average 9.2 and the main market PE is now 9.8.
The TOP 10 stocks now trade at an average discount of 44 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings. The main market stocks trade at a discount of 39 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.

Big boost for Access from new Acquisition

In its quest for continued growth by acquisition Junior Market listed Access Financial Services announces yet another prospective acquisition.
The micro lender has indicated that it has reached an agreement to acquire a Florida based consumer finance company. The release by the company states that the successful completion of the acquisition expected to be completed in 90 days, is subject to satisfaction of all conditions of the purchase agreement and applicable legal and regulatory approvals.
Usually reliable source indicates that this acquisition when concluded will swell Access assets by US$8 or J$1 billion and will increase Access size by 25 percent. Estimated revenues should be approximately US$4 million per annum at the present level of business. The business is based on lending, for up three months with loans usually under US$1,000. The loans are collateralized by motor vehicles titles. The entire loan process is done on line thus requiring limited staffing. According to a report online, “today in Florida, we have car title loan clients achieving 90 percent to 140 percent per annum on their loan portfolios.”

Access Financial

This acquisition when completed will bring to 5, the number of entities Access acquired since 2015. In 2017, the loan portfolio, fixed assets and trade name of Micro Credit Limited. In 2016, Access purchased the business of Damark Limited comprising mainly the loan portfolio, fixed assets, trademark for $180 million. In 2015, Access acquired the loan portfolios of Asset Management Company, formerly operated by Scotia Investments.
Access recorded net profit after tax of $217 million from revenues of $457 million for the quarter ended June this year up 16 percent over net profit of $188 million for the corresponding period in 2017. Total assets at June, amounted to $3.86 billion.
The company’s stock is listed on the Junior Market of the Jamaica Stock Exchange and last traded at $45.50.

Profit jumps 56% at Knutsford Express

Knutsford Express posted strong gains in profit for Q1.

After more than a year when Knutsford Express traded at elevated levels, things are on the mend but investors in the stock may still have to wait to see their investment paying off with much increase in the stock price.
The company’s latest results is encouraging that investors’ wait for full recovery of the price may not be far away. Profit jumped 56 percent in the August quarter to $88 million from $57 million in 2017 from Sale revenues that rose 23 percent for the quarter to $293 million from $237 million in 2017.
The company still has not provided investors with relevant information to be able to see what gross profit margin they are enjoying to better determine how well the operation is being managed.
Expenses rose at a slower pace than revenues, climbing 16 percent to $211 million from $181 million. Earnings per share rose to 18 cents for the quarter, up from 11 cents on 2017. IC Insider.com is forecasting 75 cents per share. The stock traded at $11.5 on the Junior Market of the Jamaica Stock Exchange, with a PE ratio of 15 times 2019 earnings.
Gross cash flow brought in $108 million but growth in receivables, inventories, addition of $61 million to fixed assets net cash flows used up just $4 resulting in with cash and bank balances of $134 million plus short term investments of $96 million. At the end of August, shareholders’ equity stands at $714 million with borrowings at just $71 million. Net current assets ended the period $280 million well over Payables of $34 million.

Barita could spike higher this week

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

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

Caribbean Cream sales & profit slowed in Q2.

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

Caribbean Cement price is stuck in the mud for now.

week, it traded as high as $75. Caribbean Cement keeps trading between $46 and $50, but there appears no real desire to move the price forward, this one could be negatively affected by foreign exchange losses in the September quarter. Kingston Wharves has always had limited supply, so it could move higher going forward, even the valuation is rich. Supply of JMMB Group has dried up and that could create the environment for the price to continue to move higher, it is also one of the lower valued stock in the main market. Investors need to bear in mind that the price is currently at a resistance level at $37, so it may move sideways with an upward bias for a while, unless strong buying pushes over this level.
An overall view of stocks indicates that the main market continues to be steered higher by an upward sloping support line as well the 45 and 125 day moving averages, lending support just below. The Junior Market is being guided by an upward rising long-term support line and a golden cross. The golden cross is a very strong bullish long-term signal, but market needs fuel of rising profits.

Grace, Proven, Access & Iron Rock in TOP 10

Grace Kennedy HQ

Decline in the prices of three stocks during the week and gains by others resulted in changes to the IC Insider.com TOP 10 list this week.
Grace Kennedy pulled back to $59.50 and Proven Investments down to 21 US cents and Access Financial falling, with the offer at $45.50, Dolphin Cove and Iron Rock declining to $4.50 moved into the top stock list, taking the place of Sagicor Group that moved up to $42.55 and Salada Foods that moved up to $24.95 in the main market, while Caribbean Cream that fell to $6.16 to enter last weeks’ list moved up in price to $7.68 and with a slight downgrade to earnings to 65 cents per share, fell out of the top list and Caribbean Producers climbed to $7 and is also out.
The main hit new historical highs on Friday resulted in the overall PE for the main market rising to 16.3 up from 15.8 from the previous week, the PE of the Junior market remained unchanged at 15.8.
The PE ratio for Junior Market Top 10 stocks average 9.5 and the main market PE is now 9.9, marginally higher than the prior week’s level, as the market continues to see an upward revaluation of the multiple.
The TOP 10 stocks now trade at an average discount of 40 percent to the average for the Junior Market Top stocks but it’s a third of what the average PE for the year is likely to be of 20 times earnings. The main market stocks trade at a discount of 39 percent to the overall market.
TOP 10 stocks are likely to deliver the best returns within a 12 months period. Stocks are selected based on projected earnings for each company’s current fiscal year. Based on an assumed PE for each, the likely gains are determined and then ranked, with the stocks with the highest potential gains ranked first followed by the rest, in descending order. Potential values will change as stock prices fluctuate and will result in movements of the selection in and out of the lists for most weeks. Earnings per share are revised on an ongoing basis based on new information received that can result in changes in and out of the list as well.