2 new BUY RATED stocks
Jetcon Corporation and ISP Finance have been added to the IC Insider BUY RATED list. The list continues to sport selections that have some room to grow before they reach the stage of maturing. Some have reached levels that look like they may be close to the top and stay there for a while and the may be just be rated hold than BUY RATED at this stage of the market’s rally in Jamaica.
The Trinidad based companies appear to be saddled by the effects of the recession on their performance.
There are now a few that were previously listed as BUY RATED have moved to Watch, as these stocks are likely to be market underperformers. If these are already owned then investors may want to hold on a little longer, buying into them now, while such a move could be profitable such investment may not be the smartest move at this time. At this stage of the Jamaican market it has become more challenging to continue to back some of the strong performers to date, as their valuation has risen and future gains will most likely come from gain in profit, unless the market revalues the PE ratios higher, a factor that is expected with lower interest rates likely in the months to follow.
Knutsford Express has been to Market Watch as it close to our target price of $24 at this time and while there is more growth to come with increased frequency slated for the north coast routes, increased profits going forward could slow considerably from recent strong gains. Sagicor Group has done well since we selected it, with an increase close to 150 percent plus dividends, the immediate future looks like the gains are going to slow compared to the growth since the start of 2015. In past bull market, investors gave it a big premium over the rest of the market. That is not so now, but could change as the current bull market continues it run.
Lasco Distributors that was moved to a hold is now back to a buy, since the price has pulled back to $5, the company will benefit from taking over the overseas distribution of all of the manufacturing company products. The inflows expected from the lawsuit with Pfizer should add to the company’s value when the courts agree the amount, which management puts at more than US$300 million.
AMG Packaging, Caribbean Cream and Paramount are all up more than 300 percent but expansion into new products should give revenues and profit a kick in the not too distant future for AMG and Paramount. Caribbean Cream full year results are due shortly and should exceed 55 cents per share as the company benefited from sharp drop in raw material cost.
Jamaica Stock Exchange is now a Watch as it seems close to fairly valued currently, but dividend yield could well push it higher. In addition, of note is that while trading levels have improved they are still well off from historical highs, so there could still be much more gains ahead later on.
Trinidad is in recession and the results of companies are showing it with pressure on profit particularly for companies that earn the bulk of their income in the twin island state. As a result prices have been declining for many of the companies on the Trinidad market with a few exceptions. With the exception of Trinidad Cement that is undervalued, a hold has been placed on Trinidad based listed stocks for the time being but investors should wait for TCL to settle before buying.
Big jump again for juniors
The market ended with 7 securities trading with 741,698 units changing hands, valued at $2,204,755 and the prices of 4 stocks rising and 2 declining.
At the close, the junior market had 6 stocks having bids higher than their last selling prices, 2 with lower offers. 6 securities closed with no bids to buy, while 8 had no stocks being offered for sale.
Stocks trading are, AMG Packaging traded 365,828 units with the price rising 5 cents to $3.50, Caribbean Cream had 6,998 shares trading, lost 5 cents to close at $2.05. Lasco Distributors traded 60,000 shares to close at $1.65, up 5 cents, the stock closed with demand to buy $158 and $1.60 and selling at $1.80 but there are only 3 offers in the market at $1.80 to $2.13 for 70,000 units. Lasco Financial Services traded 128,290 units and gained 2 cents to end at $1.52, after posting first quarter profit of $54 million compared with $47 million in 2014, Lasco Manufacturing with 74,582 shares trading, closed 10 cents higher at $1.60, for anew 52 weeks high, after posting first quarter profit of $247 million compared with $141 million in 2014. Lasco Manufacturing has demand to buy at $1.60, but the offers are light with under 50,000 units ranging from $1.65 to $2.50. Paramount traded 80,000 shares at $5.50 for a loss of 50 cents and Epply 10 percent preference share traded 26,000 units at $2.40.
Buy Rated blooming
Trinidadian stocks have hardly gone anywhere the Jamaican ones are soaring after a long period of drought. There are three triple winners in the main Jamaican market including Hardware and lumber that is up 291 percent since we selected it as Buy Rated. Interestingly, they are no losing stocks in this market. The junior stocks have erased most of the losses suffered earlier and now only two stocks record any losses. Technical indicators are pointing to the Jamaican rally continuing for the rest of the year with lower inflation and interest rates coupled with continued strong profit gains. Trinidad stocks will continue to be under pressure but there are a few severely undervalued ones in that market that could post decent gains in the months ahead.
Access still has further to go as the future looks good for growth in profits but the price of the stock could be trading around current levels for some time but there is limited volumes available, this one becomes a longer term buy with the price where is currently lies. Caribbean Cream and Paramount seems to have quite some gains to deliver in the months ahead as improving results encourage investors to buy into the growth prospects. Lasco Financial could be going anywhere with Mayberry buying 20 percent and buying more in the market of a stock with limited float and Medical Disposables has good potential to deliver a decent gain.
The main market may have had lots of gains so far but there is much more to come from even some of the top performers such as Jamaica Stock Exchange, National Commercial Bank, Caribbean Cement and Carreras to name a few. Over in Trinidad, Guardian Holdings is undervalued but National Flour is severely undervalued, Trinidad Cement is a huge buy with much upside potential especially with debt restructuring leading to lower interest cost and lower energy cost in Jamaica and Barbados.
More stocks added to buy rated list
Mayberry Investments is one of the latest stocks to be added to the buy rated list based on stability in earnings, but mostly based on what seem likely to be improvement in the Jamaican stock market going forward and the gains that could accrue to the company if trading levels and stock values pick up.
Scotia Trinidad and West Indian Tobacco were restored to the list with expected higher earnings in 2015 than in 2014 as well as Scotiabank’s fall in price below $60 per share.
Jamaica’s junior market stocks get expanded, partially based on where prices are now and reasonable profits generated for 2014 so far, with increased earnings likely in 2015. Paramount and Medical Disposables were elevated to BUY RATED and Access was restored to the list.
The Jamaica Stock Exchange is being watched for a possible upgrade form Market Watch to Buy Rated.