Lasco out Medi Disposables back in IC TOP 10

Lasco Distributors rose from $2.85 to close at $3.25 after the company posted a 57 percent rise in first-quarter profit and Medical Disposables returns with the stock finding support just under $5 this past week after posting disappointing full-year results at the end of the prior week.
There was no change in the Main Market TOP 10 list for the week that saw the Main Market remaining relatively stable for the past week, while the Junior Market rose 35 points for the week on top of gains in the previous week.
Although Lasco Distributors is out of the TOP 10, investors should expect to see more gains, with the EPS of 38 cents for this fiscal year, as the stock trades at 8.7 times earnings compared with 11.2 for the Junior Market. Caribbean Cream reported good first-quarter results, suggesting a significant increase in full-year profits. The stock closed the week at $4, up from $3.65, and is poised for more gains in the weeks to come. There are limited offers to sell the stock while buying interest has picked up.
The top three stocks in each market saw little change in the rankings, leaving the top three Junior Market stocks, with the potential to gain between 239 to 695 percent by March 2021. The first is Caribbean Producers, followed by Lasco Financial and Stationery and Office Supplies.
The top three stocks in the Main Market, with expected gains of 182 to 233 percent, are Berger Paints followed by Radio Jamaica and JMMB Group.

Grace Kennedy new headquarters in downtown Kingston

This week’s focus: Grace Kennedy posted revenues of $56.5 billion, up 10 percent over the corresponding period of the prior year. Profit before tax was $4.5 billion, reflecting a 53 percent improvement over the same period in 2019. Net Profit after tax increased 36.5 percent to $2.75 billion after minority interest, with earnings per stock unit for the period of $2.77. The result to date is outstanding, projected earnings for 2021 is over $11 per share, putting the stock in the category of one of the best buys in the Main Market currently. IC has upped its forecast for 2020 per share to $7.25, with a PE ratio of 8 at the closing stock price of $57.
QWI Investments just released its June quarter results, with a loss of $461 million for the year to date and a profit of $115 million in the latest quarter. The company’s portfolio comprises a mix of stocks mainly in Jamaica and the USA, with a smattering in Trinidad. At the end of July, the net asset value (NAV) continued to increase and ended the month at $1.06, up 11.5 percent from 95 cents at the end of March this year. The performance beats the JSE Main Market index that is down 2.5 percent over the same period and the JSE Combined Index down one percent for the same period. The NAV growth that reflects changes to the investment value plus dividend income after expenses is just behind the JSE Junior Market index that is up 12.4 percent over the same period. The stock price closed at 73 cents on the local market on Friday, at a steep discount of 41 percent to the net asset value.
Access Financial reported a first-quarter profit after tax to June of $33 million, compared to $165 million for the similar period in 2019 after additional provision for loan losses amounting to $67 million and loan write-off of $38 million. Income slipped as loans contracted, but the cost in some areas fell. The company is sound and is poised to return to higher levels of profit, and could even reverse some of the loan loss provisions going forward.
The targeted average PE ratio of the market is 20 based on the profits of companies reporting full year’s results from now to the second quarter in 2021. Both the Junior and Main markets are currently trading well below this level an indication of the potential gains ahead. The JSE Main Market ended the week, with an overall PE of 14.9 and the Junior Market at just 11.2, based on IC’s projected 2020-21 earnings. The average PE ratio of the Junior Market has been slowly rising and narrowing the gap, with the Main Market as investors see better profit opportunities in this sector. The PE ratio for the Junior Market Top 10 stocks averages a mere 6.3 at just 56 percent to the average of the overall Junior Market. The Main Market TOP 10 stocks trade at a PE of 8.1 or 55 percent of the PE of the overall market.
The average projected gain for the IC TOP 10 stocks is 261 percent, for the Junior Market and 153 percent for the JSE Main Market, based on 2020-21 earnings, an indication that there is the potential to make greater gains in the Junior Market than in the Main Market.
IC TOP 10 stocks are likely to deliver the best returns up to March 2021 and ranked in order of potential gains, based on likely gain for each company, taking into account the earnings and PE ratios for the current fiscal year. 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. Revisions to earnings per share are ongoing, based on receipt of new information.

Persons who compiled this report may have an interest in securities commented on in this report.

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