Last week’s stock to watch, Everything Fresh, climbed another 12.5 percent on top of the solid 43.5 percent last week to close the week at $1.89, while Consolidated Bakeries, added to the list last week, surged 34 percent to close at $1.99 as investors aggressively sucked 837,932 shares out of the market, leaving just eight lots of stocks amounting to 71,000 units on offer.
New to the list this week is Lumber Depot, that is undervalued with good potential to expand. ONE on ONE Education Services should list soon and will enjoy a significant price hike a few days after listing.
138 Student Living delivered a 41 percent jump in the week and should move even higher in the weeks ahead, while Stationery and Office Supplies picked up a bit as some demand came in for the stock. Expect more gains in the months ahead.
Investors should continue to watch Caribbean Assurance Brokers, Caribbean Producers, Dolphin Cove, Express Catering, Guardian Holdings, Jamaica Broilers, Lasco Distributors, Lasco Manufacturing, NCB Financial and Paramount Trading.
Dolphin Cove, Caribbean Producers, Express Catering and Everything Fresh will be significant beneficiaries of the strong rebound in tourist arrivals, now back to 2019 levels.
138 Student Living jumps 41%, Purity 34%
Everything Fresh jumps 44% last week
Last week’s stock to watch, Everything Fresh, climbed 43.5 percent from $1.17 to close the week at $1.68 and should move higher and Future Energy Source, that reported fabulous results for the first quarter, was one to watch. The stock added to the $5.29 price it closed the previous week at and closed on Friday at $5.63, with a PE ratio of 22.5.
Everything Fresh traded at $1.68 on Friday to gain 43.5% for the week.
This week, Consolidated Bakeries is added to the list, following excellent half year results, with prospects of more gains ahead, but General Accident is out following a bump in claims in the second quarter that squeezed profit. Also added to the list is ONE on ONE Education Services, which should list this month and enjoy a significant price hike.
138 Student Living reported strong June results but hardly moved in a week that the markets suffered declines. Meanwhile, Stationery and Office Supplies pulled back a bit as demand weakened following good half year results.
This week’s other ICInsider.com watch listings are Caribbean Assurance Brokers, Caribbean Producers, Dolphin Cove, Express Catering, Guardian Holdings, Jamaica Broilers, Lasco Distributors, Lasco Manufacturing, NCB Financial and Paramount Trading.
Dolphin Cove, Caribbean Producers, Express Catering and Everything Fresh will be major beneficiaries of the strong rebound in tourist arrivals, now back to 2019 levels.
Refunds should start returning to investors from ONE on ONE Education Services this week now that allocations in the recent IPO are determined. That could make a big difference to the market as investors deploy those funds in the market.
SOS dividend consideration sends stock price flying
Stationery & Office Supplies announced that the board of directors will consider the payment of a dividend at a meeting to be held on August 9, 2022 and with the stock price closing at a 52 weeks’ high of $15 and seems to be heading higher.
The company last paid a dividend of 16 cents per share on December 7 last year. The early announcement caught the market by surprise as investors bought 303,359 shares up to a 52 weeks’ high of $15, with the stock closing with the bid at $15.84 and the offer at $17.90 and gaining 135 percent for the year to date.
The likely early payment is signalling that the company could be switching to twice a year payout as well as the fact that the good results evident in the first quarter is continuing into the rest of the year.
Some observers are of the view that the dividend announcement by itself was unlikely to move the stock price by the amount in today’s trading and think investors are sensing a stock split.
SOS to make early dividend payout
With the stock price having risen and seems set to go higher the price is clearly entering into a split territory, considering that there are just 250 million shares issued with the top 10 holdings accounting for 90 percent and leaving only about 25 million units that are likely to trade short term. The possibility of a stock split coming up for discussion at the meeting considering a dividend seems probable but such an action if it were to occur would have to be communicated to the Jamaica Stock Exchange ahead of any meeting at which it was to be approved.
The March quarter profit rose 90 percent to $105 million over that for 2021 and ICinsider.com forecast earnings of $1.70 for the current year.
SOS buys printing press, set for record profits
Stationery & Office Supplies announced the acquisition of assets of D&K’s Printing and Office Supplies including 10 additional book manufacturing machines effective, Monday, June 6, 2022.
Stationery & Office Supplies is back in the TOP 10 but could fall in prive this week before moving higher.
The purchase will diversify the product range and increase the manufacturing capacity of the range of products produced by SEEK. Seek which was acquired in April 2018 produces exercise and hardcover books steno books and binder refills. The acquisition will allow them to print books with working in them such as receipts books, invoice books, graph paper and notebooks. In short, it expands the range of products that it can now print, some of which it currently sells which will improve profit margins.
The acquisition which is expected to contribute some 20-25 percent to Seek’s revenues, ICInsder.com gleaned and continues the process of acquiring strategic assets or businesses to accelerate business growth and will add 12 employees to the printing operation.
In 2021 revenues from the book manufacturing were $48 million and in 2019, some $62 million which is expected to hit around $80 million in 2022 and should reach into the $100 million range in 2023.
Revenues seem to be back to normal with January 2019 generating revenues of $344 million that were overtaken this year and June 2019 being $295 million which seems set to be exceeded in the June quarter as well. Based on the acquisition which will add to revenues and profit and the expected continuation of the robust first quarter revenue growth of 36 percent. Revenues for the rest of the year could accelerate, with the economy opening up since the first quarter.
The company gave a glimpse of what the rest of the year could be like, with SOS setting a new record for monthly sales, of $140 million in February, with sales reaching $173 million in March, 25 percent higher than February. If the trend continues into the second quarter, revenues could reach $480 million and may well continue the acceleration to the end of the year.
ICIinsider.com has upgraded earnings to $1.70 excluding the $23 million gain on the sale of property in the first quarter and that would put the stock at a PE well under 10 times this year’s earnings, assuming no major negative developments that could impair revenues and profits.
Rebound for Stationery & Office Supplies
Stationery & Office Supplies is enjoying a strong rebound from the COVID-19 afflicted 2020 financial year, with profit swinging from a loss of $22 million in the June 2020 quarter to a small profit of $3 million in the 2021 second quarter and well off from a profit of $34 million in the 2019 June Quarter.
Stationery & Office Supplies Montego Bay
Profit rose over 168 percent year on year for the first 6 months of 2021, from $21.8 million in 2020 to $58.4 million.
Sales surged 76 percent in the June quarter to $238 million from the 2020 covid-19 battered quarter and 17 percent for the half year to $551 versus $472 million in the 2020 period. While making a good recovery, this year’s revenues trail that of 2019 by some degree. Revenues in June 2019 quarter were 24 percent higher at $295 million and for the half year, 15 percent greater than the $633 million generated in 2019.
The cost of goods sold rose 61 percent in the quarter to $117 million and 7 percent for the half year to $261 million. Gross profit margin rose to 51 percent in the quarter, with gross profit of $120 million up from 46 percent in 2020, with gross profit of $63 million. For the half year, gross profit margin rose to 53 percent from gross profit of $290 million up from 46 percent in 2020, with gross profit of $228 million.
Administrative and general expenses rose 54 percent to $82 million from $55 million in 2020 during the June quarters and climbed a milder 16 percent to $163 million from $141 million for the six months period. Selling and promotional costs rose from $14.6 million in the June 2020 quarter to $22 million and moved from $38 million for the six months in 2020 to $43 million in 2021.
Depreciation, amortisation and impairment charges were slightly down in the quarter at $8.2 million versus $8.7 million in 2020 and $16.5 million compared to $17.8 million for the half year. Finance and foreign exchange cost accounted for $5.2 million in the quarter versus $6.4 million in 2020 and $10 million in the six months period this year, from $12 million in 2020.
“History has shown that SOS’s second quarter is normally the slowest period during the year, but even though we continue to suffer through the Covid-19 virus and all of the issues that come along with it, SOS was able to post a profit, with significant improvements compared to the second quarter of 2020. 
These are good indicators that Jamaica’s economy is continuing to rebound and as we progress through the summer months, we will see the return of children to school which will also help improve the sales of SEEK back to school products in the market,” stated David McDaniel, Managing Director and Marjorie McDaniel, Chief Administrative officer in their joint commentary of the results.
Earnings per share for the second quarter for 2021 amount to one cent and 23 cents for the half year. ICInsider.com projects full year earnings at 85 cents per share and $1.50 for 2022. The stock traded at $7.50, with a PE of 9, based on 2021 earnings and that compares favourably with the market average PE of 12.4.
The company remains in a healthy financial position at the end of half year period. At the end of June, shareholders’ equity stood at $668 million, with long term borrowings at $114 million and short term borrowings at $39 million. Gross cash flow amounts to $89 million but, with growth in working capital and repayment of loans, the company ended the half year with net negative flows of $6 million. Current assets stood at $509 million, including inventories of $276 million, trade and other receivables of $102 million, and cash and bank balances of $91 million. Current liabilities ended at $126 million, with net current assets ending at $382 million.
Virus hits SOS in 2020 Q1
The 2019 financial year was an excellent one for Stationery and Office Supplies, with record revenues of just over $1.2 billion, resulting in net profit rising 47 percent to $135 million over the previous year. 
On the heels of the robust 2019 performance, SOS started the 2020 fiscal year on a much more somber note as the Coronavirus intervened and changed what started as a promising quarter and ended with lost sales in the final month. The Deputy Managing Director, Allan McDaniels and Marjorie McDaniels, Chief Operating Officer in their joint report accompanying the interim results, reported that the ”revenues dropped 17 percent year over year for March, after a strong showing for the first two months of the quarter.” The directors also stated that the company “was only able to deliver on one of three planned shipments of goods for the first four months of the year to Grenada.” as a result of the disruption caused by the Coronavirus.”
SOS closed out its first quarter with sales of $337 million, a 2 percent decline versus the $343.5 million in comparative period for 2019, net profit dropped a more aggressive 24 percent, from $57.4 million in 2019 to $43.8 million in 2020.
Direct expenses were down 2 percent to $172 million, but the Gross profit margin for the quarter was constant at 49 percent in the 2020 quarter, similar to the 2019 first quarter. Gross profit closed out the quarter at $165 million down slightly from $168 million in the March 2019 quarter.
Net profit margin before finance cost declined for the March quarter to 14 percent with $45.54 million generated compared to $60 million for a 17 percent margin, in 2019.
Administrative expenses grew by 11 percent to $86 million, but selling and promotional expenses were effectively flat at $23 million. SOS realized $3.3 million profit from the disposal of property and equipment, helping to offset some of the reduced operating profit for the period.
Earnings per share came out at 18 cents for the quarter, down from 23 cents for the 2019 first quarter. IC Insider.com is forecasting $1 per share for PE of six times earnings, but that depends on how quickly the company can recover from the dislocation to sales.
The operations generated $50 million in cash inflows and the company paid out a net amount of $22 million in increased working capital, capital expenditure and loan repayment.
Cash and equivalents rose 66 percent between March 2019 and 2020 to end at $90.4 million. Current assets increased by 8 percent to $521 million with trade and other receivables accounting for $173 million, down from $182 million from a year ago. Inventories ended at $226 million from $223 million at the end of March 2019. Current liabilities stood at $120 million down 23 percent year over year from $156 million. Current liabilities include borrowings of $30 million and payables of $91 million. Overall total loans payable amounted to $91 million. Shareholder’s equity climbed to $640 million up from $540 million at the end of March 2019 and $597 million at the end of December last year.
The stock traded at $6 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 6 times 2020 earnings.
Worse day for Jamaican Stocks
The Jamaica Stock Exchange suffered it worse day with a fall of 24,224.80 points off the Composite index on Thursday, beating the 14,424.69 points fall on Tuesday when the market closed at 511,165.47.
Main Market stock suffering significant declines include NCB Financial $1.55, Caribbean Cement $2, PanJam Investments $2.01, Scotia Group $2, Sygnus Credit $3.30 and Wisynco off $2.45.
The Junior Market that has been under pressure some months and fell 99.62 points on Wednesday dropped another 102.35 points on Thursday, to close at 2,656.41. Junior Market stocks that suffered the greatest losses that to Thursday’s sharp fall include Access Financial down $2.11, Blue Power off 56 cents, Cargo Handlers with a loss of 96 cents Express Catering falling 46 cents, General Accident down 80 cents, Knutsford Express off by 65 cents and Stationery and Office Supplies down 75 cents.
Two financial stocks return to TOP 10
Unlike last week when there were several changes to the TOP 10 lists, this past week had just two changes, with Lasco Financial returning to the junior market and Sagicor Group to the Main market lists.
CAC 2000 dropped out of the Junior Marketlisting, allowing for the return of Lasco Financial that dropped sharply in price, to close the week at $3.40. Mayberry Investments was edged out by Sagicor Group, dropping from $34.35 to $31.75 at the close of the past week.
Former TOP main market value stock, 
Barita Investments moved up from $9.40 during the previous week to close at $11.60 for a gain of more than 273 percent since September last year. The most recent Initial Public Offering, Stationery and Office Supplies that exited the TOP 10 after listing in the prior week, is fluctuating between $4 and just over $5, and should undergo some amount of wide price movements until demand and supply find some balance. JMMB Group climbed to $23 on Friday before closing back at $21.45, supply has dried up for this stock and it seems to be readying to make an early exit in the next few weeks.
The average PE ratio for the Junior Market Top stocks is at 7.5 and the PE for the main market TOP 10, ends the week at 7.2. The average PE for the overall main market trades at 13.3 and 13.2 for Junior Market, based on 2017 estimated earnings.
At the close of the week, IC Insider.com’s TOP 10 stocks now trade at an average discount of 42 percent to the average of the market for Junior Market Top stocks and it remains at 46 percent for the main market.
Major changes to TOP 10 stocks
Barita jumps TOP 10 with more than 200% gain since September 2016
Investors pushed the price of Barita Investments to $9.40 during the week and drove newly listed Stationery and Office Supplies to $5.10 after it was listed on Thursday moving both out of the top flight of stocks. In addition, four others changed places with new listings.
Barita entered the list when we started the TOP 5 back in September last year, at $3.11 and has gained more than 200 percent since then while SOS is up 154 percent from its IPO price. Both stocks have more room for growth.
tTech reported lower profit in the second quarter to June with lower revenues resulting in a lower earnings forecast for 2017 and dropped out of the top list. CAC 2000 having slipped out of the listing the prior week returned this past week and was joined by Dolphin Cove to replace the two that exited the listing.
Main market stock, Berger Paints fell during the week from $19 to trade at $16 and moved back into the listing. Moving in are Grace Kennedy, Mayberry Investments and PanJam Investment. Stocks graduating from the top flight are Seprod as the price rose during the week to $33.33 from $30, 
Sagicor Group moving from $31.50 to $34.35 and Salada Foods that closed at $9.50, up from $9.
The average PE ratio for the Junior Market Top stocks is at 7.6 and the PE for the main market TOP 10, ends the week at 7.2. The average PE for the overall main market trades at 13.2 and 12.9 for Junior Market, based on 2017 estimated earnings.
At the close of the week, IC Insider.com’s TOP 10 stocks now trade at an average discount of 41 percent to the average of the market for Junior Market Top stocks and 46 percent for the main market.
Will Barita jump TOP 10?
Barita closed at $8 on Friday.
News emerged during the past week that directors at Barita Investments was considering a bid to purchase the majority of its shares.
Investors responded immediately by removing just about all offers that were posted on the trading platform of the Jamaica Stock Exchange, the stock climbed to $8 and only require a small increase to leave the top list.
Main market Berger Paints rose during the week from $18 to trade at $19 and was edged out of the top list by Pulse Investments that fell sharply in price to close with a bid of $1.75 after the price fell during the week.
Recent TOP 10 billing, NCB Financial Group that recently fell out of the top list closed the week at $94.99 in response to continued demand flowing from strong increase in nine months profit against a back drop of minimal selling of the stock.Stationery and Office Supplies (SOS) will start trading on Wednesday, August 9, when the price is expected to surge, based on the heavy over subscription at the initial public offering, with more than 1,200 applications for shares. This stock could be out of the top listing very soon.
Other junior market stocks activity, CAC 2000 fell out of the top listing and Lasco Manufacturing returned to the top listing.
The average PE ratio for the Junior Market Top stocks is at 6.7 and the PE for the main market TOP 10, ends the week at 7.4.
The average PE for the overall main market trades at 13.3 and 12 for Junior Market, based on 2017 estimated earnings.At the close of the week, IC Insider.com’s TOP 10 stocks now trade at an average discount of 44 percent to the average of the market, leaving stocks with room for growth in the months ahead.
Stocks to watch|The stocks that investors should keep an eye on this week include, Barita Investments, JMMB Group, Stationery & Office Supplies, NCB Financial, Jetcon Corporation.