Top 15 Junior market stocks for 2019

Selection of stocks is not isolated from the environment in which the companies operate. Accordingly, investors need to take developments in the wider economy and in certain sectors that can impact profit.
The data available suggest that Junior Market stocks should do better than those in the main market, in 2019. The TOP 15 Junior market stocks, selected based on the lowest PE ratio, using 2019 projected earnings and stock prices at the start of the year, are listed below.
AMG Packaging – PE 6. AMG suffered from losses incurred in their venture into the production of toilet tissue that failed, resulted in losses and dragging down profit in the box making business. Now that the segment of the business is closed, focus can be on their core business for which there is demand. Revenues should grow along powered by growth in the wider economy. The company reported a big jump in profit for the first quarter to November, from an increase in revenues and improved profit margin. The earnings projected is that for the fiscal year that ends in June 2020, when they would have implemented price adjustments to recover the fall in profit margin. IC Insider.com sees management as a weak area of its operation. Hopefully, changes in the composition of the board will address this frontally. Since the start of the year the price has moved up to $2.70 in response to the strong gains in the first quarter profit.Caribbean Cream – PE 9. The company enjoyed increased sales for the nine months to November last year but with flat sales in the second quarter and pick up in the third quarter. Importantly, the raw material prices for a number of production items fell sharply on the world market and will lower cost for them. The latest is the fall in the price of crude oil that will result in cheaper electricity cost as well and as JPS switches to lower electricity production the savings should gather steam during the year. The combination of lower input cost and increased sales will make the stock a winner in the current year. An investment in the stock around the $5.50 level that it is trading at may not pay off until the second half on 2019 when higher profit is expected. Caribbean Producers – PE 6. The company has more going for it that it has so far
delivered. The interim report to September recorded a loss of $1.3 million, but that was mostly due to write down of computer software cost and cut in the selling prices of some items that affected profit margins negatively. The core business is not affected and margins were, restored in the second quarter. The company benefits from growth in the tourism sectors in both Jamaica and St Lucia where it operates.
General AccidentPE 4.5. Investors are not seriously looking at this stock but they should. The stock is undervalued based on a PE and net asset value. Up to September, the company posted strong gains in profit for the nine months. Reports suggest that the company is looking to expand outside of Jamaica. Increased premium rates and a large pool of investible funds, are expected to deliver higher revenues and profit for the company for awhile. Continued growth in the Jamaican economy will provide a basis for above average growth in premium income and profit.
Fontana – PE 10. The PE is 10 based on current fiscal year’s earning but 7 times based on the next fiscal year results. Investors are unlikely to get this stock in the secondary market close to the IPO price any time soon. Expansion plans will make it a good investment for long term investors if bough in the $3 region. The company will be opening their newest branch in Kingston by the second half of 2019. That will result in increased revenues and profit for the 2020 fiscal year that ends in June. They also have plans for the opening of 3 more stores in the island, when completed they will result in above average growth in revenues and profit.
Elite Diagnostic PE is 6. The company recorded increased cost in 2018 as expenses associated with two new branches impacted profit negatively. The second branch is now in operation and reporting profit, while the one to open in St Anns Bay in the middle of this year should lay the foundation for continued above average growth for another year or two.
Iron Rock Insurance – PE 6. Iron Rock made profit in the September quarter for the first time and was set to report a full year of profit. Moving into 2019, revenues from increased premium income and low overhead cost and growth in the local economy are set to land a decent profit for them.
ISP Finance – PE 6. One of the smaller micro lenders ISP continues to grow and had to float a new bond to raise funds to service increased demand for loans. The September 2018 quarterly results show that interest rates charged on loans fell and that may have helped in stimulating increased demand. Loans should continue to rise and profit as well going into 2019, as cash flow from profits is invested in new loans.
Jamaican Teas – PE 7.5. The group will benefit from continued growth in the local economy and increased purchasing power of Jamaicans. The star performer, export sales have grown healthily for a number of years and should continue the growth path again. Added to this, some cost incurred in 2018, are unlikely to repeat in 2019. Importantly, accounting policy IAS 9 will see all gains or losses on investments being booked through the regular profit and loss statement and that could lift profit in 2019 as local stocks continue to grow in value.
Lasco Financial – PE 6.5. The company continues to earn from Money transfer business but the real growth potential rest in the micro lending area that enjoys high profit margin. The area is crowded but entities with size can have an advantage. Additionally, Lasco has a wide network of branches, used to reach a wide potential group for granting loans.
Lasco Manufacturing – PE 8. New products and the streamlining of the business with potential for more product lines that can be added make this entity a compelling long term investment.
Medical disposables – PE 7.5. The company started as a distributor of medical and pharmaceutical distributors but has now broadened their offering to involve consumer products. The base is established for a wider range of products, using a lot of the existing infrastructure that is adding to the attractiveness of the stock. Results for the June quarter showed strong increased revenues and profit but their usually slow second quarter saw modest increased revenues and flat profit. Importantly, gross profit increased well ahead of the growth in revenues and but for a big increase in foreign exchange losses, profit in quarter and six months would have climbed strongly. Revaluation of the Jamaican dollar in the December quarter will result in a reversal of some of the foreign exchange losses.

Stationery & Office Supplies MoBay Office

PTL- PE 7.5. The company reported growth in revenues for the half year to November resulting in improvement in gross profit. Administrative cost grew higher than revenues with depreciation accounting for 25 percent of the increased cost. The company’s joint venture lubricant plant, was operational during the period and resulted in cost and revenues excluded from the six months results but included in the 2017 figures.  Only the company’s share of profit is now included in the results amounting to $2 million. The company had moved into the repackaging of chlorine and bleach production in 2018. The last quarterly results have not shown much increased business from these two ventures, while they incurred increased staff cost to serve the market. Major improvement in profit, is not expected until the 2020 fiscal year that starts in June 2019 and will probably hold back the stock price for the greater part of the year.
Stationery and Office Supplies – PE 6. SOS delivered two good years on the Junior Market for early investors. IC Insider.com is forecasting another year of strong stock gains for the company. The company moved into the production of exercise books, mostly for schools and added note pads for the local and overseas markets.  Other products could be added to their line up in 2019.   
tTech – PE 6. Results for the September quarter almost doubled, with earnings per share reaching 12 cents, versus 6 cents in 2017, with operating revenues rising an attractive 25 percent. Profit for 2018 should hit 40 cents for the year. Management indicates that they are proactive in seeking new business locally and overseas and sees past marketing effort to attract new business now bearing fruit.

NCB & Berger could break out soon

NCB Financial Group’s shares looks like they could break into the $70 range soon.

In a shortened trading week on the Jamaica Stock Exchange, only one of the TOP 10 listings dropped out with Lasco Financial rising in price and gave way to just inch in Caribbean Flavours at 10th spot. For the coming week, NCB Financial Group is worth watching, with supply and demand at the close of the past week suggesting that the price could break into the $70 range before long.
is another stock worth watching with IC Insider.com upgrading earnings for the 2018 fiscal year starting April, to $1.90 from $1.60 previously used and 2017 earnings to $1.30 from $1.10. Berger ended the previous week with a last sale price of $12.20 but moved up by the end of the week to $14, closing with an offer of 1,453 units at $15 while 22,600 units are on the bid at $13.55.
The average PE ratio of both markets are currently at an average of 12, based on this year’s estimated. At the close of the markets on Thursday, IC Insider.com’s TOP 10 Junior Market stocks continue to trade at an average discount of just under 40 percent to the Junior Market average, those in the main market are trading just below 50 percent discount, leaving several stocks with good room for growth for the rest of the year.
Release of 2017 first quarter results will be important in determining if the steep price discount will continue for much longer, or whether the historical May syndrome of reduced market interest came early this year and last until summer or after, similar to 2016.
Overall bid volumes for junior market stocks remained low at the close of the past week continuing the low levels at the close of the week before.
Caribbean Cement continues to trade with a heavy downside bias notwithstanding the rise in price for the week to $32, with last year’s first quarter results dated April 20, this year’s results could be out in the coming week and provide direction for the stock. JMMB Group’s buying interest is at $18.10 for 2,073 units on the bid and 409,862 units offered at $18.40, NCB Financial Group traded on Thursday at a new record high of $66.90 before pulling back to $65 at the close, supply seems low and could help the price move up ahead of second quarter results, that should be out before month end. The stock also traded at a new high in Trinidad this past week. Pulse Investments has offers to sell 245,639 units at $8 with buying at $7 for 1,000 shares, the same as for the prior week. Radio Jamaica bid is at $1.60 to buy 279,561 units with 100,940 units on offer at $1.75 and Scotia Investments closed the week with only 550 units on the bid to buy at $37 and 4,180 units offered at $39.40.

TOP 10 selling at steep discount

I$P hits a new high on Friday.

The IC Insider.com’s TOP 10 Junior Market stocks, continue to trade at an average discount of 40 percent to the market average, while those in the main market are trading at a 50 percent discount presently.
The PE ratio of both markets are currently at an average of 12 based on this year’s estimated earnings.
During the past week ISP Finance hit a new high of $15.50 up from $12.50 at the close of the previous week to gain 24 percent for the week and 675 percent since it was listed just over a year ago, and is now out of the TOP 10. The company reported earnings of 46 cents per share for the year to December 2016 with management suggesting growth in business in the order of 30 to 40 percent for the current year, that should lift earnings sharply. Blue Power was eased out of the Top list for Juniors with Lasco Financial moving in to occupy the tenth spot, this past week. Access Finance that ended the previous week with the bid at $39, traded to end the past week at $34.25 to be back in the list.
Overall bid volumes for junior and main market stocks remain low with the only one of the Top 10 stocks with a sizeable volume on the bid for junior stocks being Key Insurance, with 172,600 units on the bid at $2.50 which is well below the last traded price of $3. Lasco Distributors is next with 37,012 units on the bid at $6.61 and a last sale of $7.30. Blue Power has 17,856 units on the bid at $35 without any stocks on offer.
In the Main market, Barita Investments has limited buying interest at the current price with just 100 units on the bid at $6.86 and just 9,200 units on the offer at $7.70, this represents quite some change form the week past when the offers were at $7, which were taken out by buyers.
Berger Paints ended with 2,500 units on the bid at $12.20 with 4,243 on offer at $12.30. Caribbean Cement’s weak demand continues in the mid-thirty dollar range, with the stock closing with only 2,340 units on the bid to buy at $31.50 while offers are at $32 to sell 53,579 units. JMMB Group’s buying is at $18.55 for 3,200 units on the bid and only 300 units offered at $18.98, Pulse Investments has offers for 245,639 units at $8 and buying at $7 for 1,000 shares while Radio Jamaica bid is at $1.60 to buy 280,761 units with 36,513 units on offer at $1.80 and Scotia Investments closed the week with 38,000 units on the bid to buy at $39.20 and 4,180 units offered at $39.40.

Berger returns Access out of Top 10

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Investors pushed down the price of Berger Paints to $12.01 by the end of the past week, pulling it back from $15 and pushing it back in the main market top list as Scotia Group slipped out.
The top main market stocks now sells at a 50 percent discount to the average main market stocks and is lower than the 40 percent discount of stocks in the junior market. During the past week ISP Finance hit a new high of $12.50 up from $12.25 at the close of the previous week, the stock still sits high on the list at number 4.
Top 10 junior stocks are trading at a 40 percent discount to the average of the junior market, at the close of the week. After dropping out of the TOP 10 for the last week Lasco Distributors returned during the end of past week while Lasco Financial Services that entered the list for the start of the past week has been squeezed out with prices declining elsewhere and Access Finance ending the week with the bid of 1,500 shares at $39, to be out of the top listing and Blue Power closing the week at $35 is back in the list. Overall bid volumes for junior and main market stocks remain low with the only ones of the Top 10 with decent volumes on the bid for junior stocks being Caribbean Producers with 60,712 units on the bid at $3.75, General Accident with 53,426 units at $3 and Medical Disposables with 103,417 units with the bid price ending at $6. Offers that are well about the bid volumes include AMG Packaging with an offer to sell 99,723 units at $5.95, Jetcon Corporation with 435,207 units at $12.99 and Lasco Distributors with 973,036 units at $6.70.
In the Main market, Barita Investments has limited buying interest at the current price with just 447 units on the bid at $6.85 and 28,224 units on the offer at $7. Berger Paints ended with 237 units on the bid at $12 with 49,894 on offer at $12.01. Carreras currently, has 38,619 shares on offer at $74 and buying of 3,000 shares at $73.95. Caribbean Cement’s weak demand continues in the mid-thirty dollar range, with the stock closing with only 2,340 units on the bid to buy at $31.50 while offers are at $32 to sell 53,579 units. JMMB Group’s buying is at $16.30 for 50,000 units on the bid and only 100 units offered at $18.24, Pulse Investments has offers for 150,000 units at $8 and buying at $7 for 1,005 shares.
Price movements continued be a bit volatile as buy and sell orders remain thin for several stocks. With little new news to come until a flood of first quarter results start to flow volatility in May, is likely to continue for a few weeks and this could provide patient investors with some good entry points.

Big Berger gain lets in Scotia

Scotia enters IC Insider.com’s TOP 10

A big 36 percent jump in the price of Berger Paints kicked it out of the main market TOP listing, allowing Scotia Group into the top list for the very first time. Berger returned to its 52 weeks high of $15 at the end of the week but had 103,511 units on offer at $15 with buying of 1,735 units at $13.01.
The top main market stocks now sell at a 50 percent discount to the average main market stocks and is lower than the discount of stocks in the junior market.
Pulse Investments gained 21 percent during the past week, to end at $8.50 and was the second largest mover in the top listing for main market stocks. Pulse has offers for 118,391 units at $8.50 and buying at $8 for 1,500 shares. Carreras earnings have been up graded with the increase in the price of cigarettes this month, following increased taxes on the product. Interest in the stock is not great currently, with 21,125 on offer at $69.50 and buying of 2,000 shares at $69.20. Radio Jamaica closed the week with 990,792 units on offer at $1.90 and buying for 5,300 units at $1.80. Barita Investments has limited buying interest at the current price with just 447 units on the bid at $6.85 and 171,830 units on the offer at $6.90. With the increased level of construction activity currently taking place in Jamaica and plans for increase construction to meet growing demand for commercial and residential units in the sector, Caribbean Cement’s weak demand continues in the mid-thirty dollar range, with the stock closing with only 2,000 units on the bid to buy at $31.50 while offers are at $32.45 to sell 24,440 units. JMMB Group weakened in the week and now sits at $17.50 but buying is on the weak side, with 5,000 units on the bid at $16.60 and only 378 units offered at $17.50.

Top 10 junior market stocks are trading at a 40 percent discount to the average of the junior market, at the close of the week, this is after Lasco Distributors fell out of the top listing and is replaced
by Lasco Financial Services that suffered a reduction in price during the week to $3.70.
During the past week ISP Finance hit a new high of $12.25 up from $11.75 at the close of the previous week, the stock still sits high on the list at number 3. Access Financial and Jetcon had a bit of price movement during the week, with both closing lower than the week before.
Price movements remained volatile during the past week, as buy and sell orders remained thin for several stocks. With little new news to come until a flood of first quarter results start to flow volatility is likely to continue for a few weeks and this could provide patient investors with some good entry points, if bids and offers are strategically placed. The sharp one week move in Berger signals that supply may not last too long before demand kicks in.

10 TOP Junior market stocks for 2017

tTech, one of ICI Insider.com top selections for 2017.

With just over one month of 2017 slipping by, the junior market is up more than 14 percent in a relative short time. Market movement delivered some stunning gains with five stocks rising between 54 percent and 77 percent up to Friday.
The PE ratio, the best measure of valuing stocks, for this market is at 10.5 times 2017 estimated earnings and 16 times 2016, with 9 stocks selling above this level, including Cargo Handlers selling at a rich 51 times 2016 and 40 times 2017 earnings. The top 10 stocks have PE ratios for 2017 between 4.3 and 7.4 times estimated earnings compared to the average of 10.5. Nine socks are priced higher than the average.
Technical indicators show the junior markets braking through major resistance levels at 2,600 points and seem poised to reach new highs around 3,400 points before the next level of resistance is met, that is 15 percent away from the close on Friday.
What makes junior market stocks attractive, is their size, relative to the majority of main market stocks and their ability to grow at a much faster pace, from existing business or expansion into new ventures, delivering superior profits and greater growth in the stock prices.
ISP Finance has very limited supply of stocks available for sale, this should ensure that the price should surge to match seller and buyers. The company could see a sharp rise in profits if the $145 million raised in a bond issue last year is invested in new loans. Based on its interim results to September last year, interest income works out at 100 percent per annum. At these levels and with the infusion of cash from the bond and the cash to flow from profits, the stock could enjoy and explosive blast, if they are able to put the funds into profitable loans.
tTech revenues for this technology company grew strongly by 34.3 percent for the nine months to September and stronger 43 percent for the September quarter, with very good demand for its services. A negative is that cost has been growing just as fast, as they add personnel to service customers need. At September 2016, the company had 33 full-time employees compared to 24 at the same period in 2015. While staffing grew 57 percent between September 2015 and September 2016, the growth in the September quarter was only 7 percent over the June quarter. The sharp growth in cost slowed growth in profits, from a relatively small base. The slowdown in staffing in the September quarter, should allow more revenues to flow into profits in 2017 onwards.

Lasco Manufacturing

Lasco Manufacturing has enjoyed very strong demand for its new drinks, resulting in major expansion of the factory. Total revenue to September 2016 was $4 billion, an increase of 28 percent over the same period last year, resulting from increased production volumes brought to market, as part of the expansion of the manufacturing plant.
The company indicated that production at the liquid plant continues to grow steadily. The plan is for increase capacity to meet strong market demand for the iCool line of beverages, by ramping up production with the installation of additional equipment by the end of the financial year. The new Dry Plant at White Marl is fully operational together with the existing Red Hills Road Dry Plant. New products will be introduced by the end of 2016 to enhance the product line which is projected to continue to realize significant sales and profits, the company stated.
Main Event is the latest public issue to hit the market. The issue was heavily oversubscribed. The price is set to enjoy a big bounce when it list this week Wednesday with the PE ratio of just 7, based on 2016 earnings and less based on estimated 2017 profit. The funds raised will be used to expand its operation, including setting up a branch in Montego Bay.
Medical Disposables focussed on increasing the product line it represents in 2016, reflecting in a strong 38 percent sales growth for the first six months of the financial year, but at lower margins. Increased cost associated with the expanded sales has so far kept profit from growing a great deal in 2016. That should change in 2017, as sales growth, out pace cost increases. With the focus on rapidly expanding products and sales, this is clearly a stock for investors to keep a keen eye on.

Caribbean Flavours traded at $9.50 on the junior market last week

Caribbean Flavours is a company with much promise for growth, with potential for increased exports and new product lines for sale, locally and with the Caribbean region. The stock is selling below many other in the junior market currently, and the price has room to run, having fallen to $9.50 with the confusion investors faced, with the acquisition majority shares by Derrimon Trading.
Access Financial is undervalued based on a number of factors but the stock is extremely scarce. Earnings for the fiscal year ending March, should be in the order of $2.80 and based on this and with 10 junior market companies selling at more than 17 times 2016 earnings, the stock should be trading over $45. As the company makes profit, most of the funds are reinvested in its operation to expand loans, this in turn fuels strong increased profit. Access seems set to generate earnings of $4.35 per share for the 2018 fiscal year, which will push the price much higher than its current level.
Key Insurance nine months profit ended at $66 million compared to $68 million for the 2015 period and seems set to reach $120 million for the full year, for earnings per share of 35 cents. The company should benefit from the lowering of restriction on investments that insurance companies could undertake which should free up funds for more profitable investments as the companies see fit. Investing in general insurance companies can be riskier than for many other companies, in the short term.

Jetcon Corporation revenues enjoyed strong growth for 1st nine months of 2016

Jetcon Corporationlisted at $2.25 in 2016, is shot to $10.50 for a rise of 366 percent. An announcement of a stock split and dividend gave the stock added push as investors bought more shares at higher prices. The company more than doubled profits to September last year over results for 2015 for the same period. Jetcon benefitted from the capital injection of the public share issue. It helped boosts inventory, and in turn grew sales by 61 percent to $610 million for the nine months to September and 86 percent for the September quarter. The publicity from the listing seems to have enhance the company’s image in the minds of potential customers which has also helped sales. The trend of increased sales for the past two years suggest that sales growth may continue to be strong in 2017 and should be helped by the continued attractive financing terms available in the market, strengthening of the economy and reduction in PAYE that some workers will enjoy, when the tax threshold increases in April thus increasing take home pay.
Dolphin Cove was the darling of the investing public when the company was listed but seems to have lost its lustre as profit growth slowed sharply. With continued growth in the tourism industry and more cruise ships coming to the country, the company should get a boost in revenues and earnings for this undervalued stock.

Persons associated with this article may have an interest in the companies commented on.