The IC Insider.com TOP 10 stocks return, with earnings per share based on the profit of companies reporting full year’s results for the new financial year that ends after the second quarter of this year up to the second quarter in 2021.
Major uncertainties abound about the local and global economy and how each company may be affected. It is not possible to determine the exact fall out from the crisis and the impact on company earnings. Accordingly, actual earnings could vary materially from IC Insider.com’s forecast. In this regard, investors need to be alert to new information that will come to the fore on an ongoing basis and be prepared to adjust their investment decisions as time passes.
Where there are major uncertainties, there is the possibility of outlandish gains accordingly. Investors should be looking beyond just the immediate situation and identify companies that are financially strong to withstand the current cut in revenues but will make a strong recovery by 2021. The three top Junior Market selections are Caribbean Producers, KLE Group and Lasco Financial with the potential to gain between 320 to 600 percent by 2021. In the Main Market, Radio Jamaica leads the pact followed by Berger Paints then Eppley with projected gains of 149 to 200 percent.
The Jamaica stock market suffered sustained pressure during March, leading to one of the most rapid falls in stock prices in the history of the market. In the past week, prices have bounced with the Main Market putting in strong gains on Thursday and Friday, but the market index is down by a sizeable 29.5 percent year to date.
The market suffered from a large amount of money that went towards buying shares in Trans Jamaica Highway. At the same time, investors were concerned about the effects the Coronavirus could have on the economy and stocks in particular. Finally, prices fell so far that lenders make margin calls on investors who borrowed money on margin, resulting in selling shares to cover the shortfall at low prices to realize cash to pay down loans.
Trans Jamaica Highway shares were listed on the market on Tuesday. That gave some investors the opportunity to raise over $223 million in cash to reinvest in the market along with refunds from the oversubscription in the IPO.
The current year has changed markedly as the Corona Virus impact on countries worldwide has been significantly disruptive, inflicting significant damage to the individuals, businesses and economies. With the wipeout of fiscal deficits and debt to GDP set to be below 90 percent, the Jamaican economy is in a far better place than at the time of the 2008 crisis that severely tested the country and led to many measures that severely affected the economy from then until 2016.
The current situation of job losses worldwide will lead to lower inflows of export earnings for Jamaica from goods and services. Currently, the tourist industry is at a standstill. There are no clear indications when operations resume and what will the level of support be from guests. The effect of the downturn in the economy will affect companies to differing degrees. Some companies with early 2020 year-ends will not have the same impact on reported results and stock prices. With prices having fallen sharply, investors have an excellent opportunity to get back in and make a bundle in the next two years or so. The key to coming out big winners is to understand how the effects on each company and the timeframe.
With the tourism industry virtually closed, companies heavily dependent on the industry will have little or no sales for a while from March.
The Group consists of Caribbean Producers, Dolphin Cove, Everything Fresh and Express Catering. Entertainment company Main Event and restaurant operator KLE Group will be hurt from patrons staying home as well as fewer tourists visiting Montego Bay and patronizing the restaurant in that town. Some major contributors to the tourism market are Grace, Jamaica Broilers and Wisynco. The results for some companies are hit by falling stock and bond prices. The results for the 2020 first quarter will show the impact of the recent market decline. The latter includes JMMB Group, Proven, NCB Financial Group, Barita Investments, VMBS Investments, Jamaican Teas, QWI Investments and Sagicor Group. Banks may have to increase loan loss provisions as businesses encounter cash flow problems and defaulting on loan payments.
The targeted average PE ratio is 20, with both the Junior and Main markets currently trading well below this level. The JSE Main Market ended the week, with an overall PE of 8 and the Junior Market a mere 8.5, based on current 2020 earnings. The PE ratio for Junior Market Top 10 stocks averages 4.7 with the Main Market at 8.
The TOP 10 stocks now trade at a discount of 45 percent of the average for Junior Market and Main Market stocks trade at a discount of 33 percent to the overall market. The average projected gain for the IC TOP 10 stocks is 377 percent for the Junior Market and 153 percent for the JSE Main Market, based mostly on 2020 earnings.
IC TOP 10 stocks are likely to deliver the best returns to March 2021. Forecasted earnings and PE ratio for the current fiscal year are in determining potential gains. The ranking of stocks is in order of likely increases, with the highest-ranked, being the most attractive. Expected 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.
Persons who compiled this report may have an interest in securities commented on in this report.
The past week saw significant fluctuations in prices of several stocks, leading to notable declines in the market indices of the Junior and Main Market and resulting in some changes in the TOP 10 stocks.
During the week, Jamaican Teas announced a three for one stock split, subject to approval by shareholders.
Forecasted earnings and PE ratio for the current fiscal year are in determining potential gains. The stocks are ranked in the order of likely increases, with the highest-ranked, being the most attractive. Expected 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.
Pulse Investments announced expansion into residential real estate development for sales and the retention of some units. The stock was added to the Main Market TOP 10 in 2019 and is on the verge of moving out, with increased buying interest. KLE Group announced the buy-out of the Tacks and Records restaurant in Montego Bay that will add significantly to revenues and boost profitability. KLE is one to watch. Proven Investments announced another stock offering, this time to the wider public. The move with help to boost broader interest in the stock as it pulls in new shareholders.
The JSE Main Market ended the week, with an overall PE of 21.2 and the Junior Market 14.6, based on current 2019 earnings. The PE ratio for Junior Market Top 10 stocks averages 9.4 with the Main Market 10.2.
The average projected gain for the IC TOP 10 stocks is 177 percent for the Junior Market and 132 percent for JSE Main Market based mostly on 2019 earnings.
IC TOP 10 stocks are likely to deliver the best returns to March next year. Forecasted earnings and PE ratio for the current fiscal year are in determining potential gains. The projected increase for each stock is ranked, with highest-ranked being the most attractive. Expected 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.
Still, they were replaced this week, by Honey Bun and tTech, in at number 9 and 10 positions, respectively. There were no changes to the TOP 10 listing for Main Market stocks.
Forecasted earnings and PE ratio for the current fiscal year are in determining potential gains. Possible gains for each stock are ranked in descending order, with the highest-ranked being the most attractive. Expected 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.
The JSE Main Market TOP 10 had just stock leaving with 
Radio Jamaica still holds on to the lead for Main Market stocks, with an expected increase of 236 percent, followed by Pulse Investments in the number two spot with projected growth of 205 percent and Sygnus US dollar-denominated stock with likely gains of 186 percent, is next.
Projected earnings, along with the PE ratio for each company’s current fiscal year, are used in determining potential gains with the likely gains ranked in descending order with highest-ranked being the most attractive. Future 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.
the Junior Market has made a sharp break out of a downward sloping channel that started after the market peaked in Mid-August. It now seems to be heading higher, with a healthy break out of the channel.
Importantly, the company is on the way to earn 70 cents per share for 2020.
Projected earnings, along with the PE ratio for each company’s current fiscal year, are used in determining potential gains with the likely gains ranked in descending order with highest-ranked being the most attractive. 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.
