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.

Large volumes put through – Friday

Berger hit at a new 52 weeks’ high in early trading on Friday.

Trading on the Jamaica Stock Exchange saw several large volumes of individual stocks being executed in the early part of the morning session, helping in driving the main and junior market indices to new highs, early in trading on Friday.
By 10:45 am, the main market indices pulled back a bit below the all-time high but the junior market index remained in record territory.
Berger Paints traded at a new high of $6.75 with 85,937 after the company released results to December showing profit of $251 million or $1.17 for the period versus $110 million for 2015 with earnings of $1.17 per share for 2016. For the quarter earnings were $185 million versus $80 million in the 2015 quarter, with revenues climbing 17.8 percent in the December quarter to $895 million.
Large trades include, Cable & Wireless 1,714,703 units at up to $1.15, Jamaica Producers with 1,763,795 shares at $9.53, Jamaica Stock Exchange 6,008,714 which was mostly a cross by Victoria Wealth at $5.56 each, but now trades at $5.50. JMMB Group 1,651,360 units at $15.30, Scotia Investments 1,167,708 at $32.83. Honey Bun 496,260 at $6.20, Lasco Distributors 7,077,911 units $7.31, Lasco Financial with 3,895,608 at $3.69, Lasco Manufacturing 10,313,202 at $5.01.
Securities changing hands, amount to 32 at 10:45 am, compared to 36 on Thursday at 11.50 am. A total of 15 securities advanced and 8 declined, resulting in a volume of 34,904,514 shares changing hands, carrying a value of $248,422,322, compared of 10,504,719 shares changing hands, carrying a value of $231,575,220 on Thursday. The average number of shares traded, amount to 1,090,766 units versus 291,798 units on Thursday.
The all Jamaica Composite Index 171.74 points to 213,689.72 the Jamaica Stock Exchange Market Index rose 153.56 points to 195,451.17, the Jamaica Stock Exchange combined index gained 294.61 points to 209,785.39 and the junior market index rose 14.81 points to 2,776.75.

Jetcon & CWJ set for 2017 top spots

C&W set to be 2017 top stock from the main market.

By the end of 2017, the two top stocks on the Jamaica Stock Exchange is forecasted by IC Insider to be the 2016 listed Jetcon Corporation and previously battered Cable and Wireless that should be reporting good profits for the year.
In the just concluded week, Caribbean Cream (Kremi) and Lasco Financial that entered the IC Insider’s TOP 5 at the end of December, only spent one week in the list. Both stocks climbed during the past week with Lasco Financial moving up 18 percent to $3.67 and Caribbean Cream gained 14 percent to $8.55. Key Insurance rose 14 percent during the week and General Accident was up 7 percent.
Entering the TOP 5 for the first time, is Dolphin Cove, and returning is Jetcon Corporation at 4th and 5th spot, respectively. Investors have lost confidence in Dolphin Cove even as the company continues to produce decent results and having good prospects, with the major expansion in the tourism industry. Profit to September last year, was up 11 percent to $1.17 per share, exceeding the results for the entire 2015.
Jetcon reported in their September quarterly

Dolphin Cove moved into the IC Insider’s TOP 5 junior market stocks.

report that they “had another quarter of strong results with revenues climbing 86 percent over the September 2015 quarter, to $267 million and climbed 61 percent to $610 million for the nine months. Profit grew 275 percent to $35 million from $9 million in the September quarter, compared with the similar period in 2015 and is up 141 percent for the nine months period over the same period in 2015.” Profit for the nine months ended at $67 million and had exceeded the $40 million after tax, earned for the full year of 2015. In mid-September the company also reported that “subsequent to the Quarter, revenues continue be ahead of the same period for 2015 by approximately 70 percent,” suggesting that the final quarter should continue to reflect the robust performance seen in the earlier months. Jetcon is poised to be IC Insider’s top junior market stock for 2017, followed by ISP Finance, based on IC Insider’s forecast.
There were not much movement in the main market stocks during the week. Radio Jamaica moved out of the TOP 5, having gained in price during the week and is replaced by National Commercial Bank, at the number 5 position. The banking group is still selling cheaper than Scotia Group with earnings for the 2017 year to be released by the end of January. IC Insider is forecasting $8 per share earnings for 2017 with increased dividend payments around $3 per share, suggesting the stock has much room for growth. The number 1 main market stock is projected to be Cable & Wireless followed by Barita Investments. Last year this publication stated that Barita was the best main market stock back in September, it is now up by 93 percent since but has much more gains ahead with projected earnings of $1.75 for 2017.

Note: One of our writers is a director of two junior companies, Jetcon Corporation and Jamaican Teas. Connected parties to IC Insider.com may hold shares in companies commented on from time to time.

Five for one stock split for AMG

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AMG Packaging to split stock by 5.

AMG Packaging to split stock by 5.

AMG Packaging directors agreed a stock split, for each ordinary share of the company to be subdivided into five units. The matter is to be decided at the upcoming annual general meeting of in January.
The move by AMG continues a trend that has been seen since Lasco companies split their stocks 10 units for each one issued in 2013, continuing with Jamaican Teas early in 2016 and a string of others since, which have all helped in increasing the value of the shares. Investors are betting that the same will happen here as they responded to the announcement on Thursday, driving the price up by $3 in exchanging 7,999 shares at $21.50. The announcement confirms an earlier report by IC Insiders’ that the company was set to split the stock.
For investors to benefit fully from a rising stock price, the company will need to improve on its 2016 results of $83 million or 81 cents per share, with the start-up of the tissue operation, dragging profits down by $41 million as a result of start-up and operating cost and sales of tissue paper of only $2.3 million.
If approved at the Annual General Meeting, the issued capital of the company will move from 102,378,857 shares to 511,894,285 with the authorised capital jumping from 140,000,000 shares to 700,000,000. The split is to allow for greater liquidity in the shares as the stock has been trading infrequently.
The 2016 results saw a major improvement in cost of sales which fell from $483 million to $451 million and includes cost of inventories expensed of $320 million and $380 million in 2015. The cost of inventories recognized as an expense includes $33 million and in 2015, $54 million in respect of write -downs of inventories to net realisable value.

Stock split who is next?

Paramount with the stock priced at $17.50 with virtually no supply seems a candidate for a stock split.

Paramount with the stock priced at $17.50 with virtually no supply seems a candidate for a stock split.

Companies on the Jamaican Stock Exchange have either announced or effected stock splits or bonuses this year, to loud applause by investors who have driven the stocks sharply upwards in response to the news.
The first to do so was Jamaican Teas with the price doubling after the announced split. Honey Bun followed with the price climbing sharply after the announcement as well as after the split. RJR did both a split and a bonus. Grace and Pan Jamaican that have seen their stock struggling for a long time at very low levels, finally get the lift with the announcement of a stock split. Jamaica Producers effected a bonus with the similar price movement. Cargo Handlers and Jamaica Stock Exchange announced stock splits and the investors immediately responded positively to them by driving the prices up. If the trend seen with other splits holds, the prices of the stocks of the latest announcements will rise further after the split takes place.
Stocks bonuses were a regular feature of the market for years until government removed the tax incentive for them. Only the three Lasco companies split their stocks to create greater liquidity in 2014. With mostly 20 percent of junior market companies’ shares in the wider public’s hands and with some of the twenty percent closely held, supply is not always easy to come by. Splitting the stock encourages increased valuation of the companies and allows for some to be sold to the wider market, thus increasing liquidity.
Palace Amusement with a price tag of $170 and virtually no supply should be a prime candidate of a split.

Palace Amusement with a price tag of $170 and virtually no supply should be a prime candidate of a split.

There are more stock splits to come, so who are the likely candidates. One would expect that Eppley, with a $735 price tag and very limited trading activity, would be a good candidate and so would Palace, with a price of $170. Based on what has happened in the past don’t count on these two to take such action anytime soon, but the directors of these companies are going to be pressured into making a move. Management who are conscious of the valuation the market places on the stock would do the things that would boost investors’ confidence in the stock. With limited liquidity, the companies are losing out on one of the most important benefit of listing which is the constant publicity garnered from having the company’s name repeated publicly daily.
Other candidates ripe for a split, include Paramount Trading, a stock that has limited supply, the company is yet to announce its annual general meeting and that seems a very god time for it to be approved. Blue Power now priced at $21 with very little supply is a prime stock for such action. Others that could well do it are Access Financial Services,
AMG Packaging with a new chairman who is stock market friendly could deliver a split sooner than later.

AMG Packaging with a new chairman who is stock market friendly could deliver a split sooner than later.

AMG Packaging with a change in chairmanship who is a stock market follower should land a split sooner than later and Knutsford Express in the junior market.
There appear few main market stocks that need to consider one but National Commercial Bank with the price struggling around $40 with good results could well do one to increase investors interest and so could Scotia Group and of course Montego Ice.
If stock splits are so popular in Jamaica, why is it not being used in Trinidad that only has limited trading taking place daily. Management is depriving their company of maximum exposure for the cost of listing and preventing their shareholders from enjoying a more liquid market in which to trade.

JSE majors make big gains – Tuesday

Trading levels picked up the early Tuesday morning session on the Jamaica Stock Exchange, with an increased number of securities trading after 75 minutes of the market’s opening leading to a sharp rise in the main market indices. The volume traded also increased well over the amount traded on Monday.
ICI int sht 17-05-16After 75 minutes of trading in the early morning session, on Tuesday, the all Jamaica Composite Index rose 1,498.66 points compared to the 2,035.21 points rise on Monday to 171,721.71, the JSE Market Index gained 1,340.05 points versus 1,819.80 points rise on Monday, to 154,591.66, the JSE combined index was up 831.40 while on Monday it rose by 1,726.04 points, to 165,354.68 and the junior market index dropped 40.14 points to 2,140.29.
Stocks traded with 100,000 units or more include, Cable & Wireless traded 122,614 shares at $1.48, followed by 1834 Investments with 118,100 at $1, Jamaica Producers had 185,220 units changing hands at $34.93 in response to an announcement of a bonus issue of shares to be put the Annual General meeting, Supreme Ventures 301,751 shares at $4.60, Caribbean Cream 208,688 at $4.60 and Lasco Distributors 705,698 shares down to $6.50.
Trading resulted in activity in 31 securities, accounting for 2,131,446 shares changing hands as 12 stocks gained and 9 declined. The average number of shares traded is 68,756 units compared to an average of 21,330 units on Monday.

JSE rise in early trading – Friday

Caribbean Cement climbed to $25 up $4.50 on the back of big jump in first quarter earnings of 98 cents per share. The stock now has a bid at $25 and is offered at $29. Stocks gaining the Junior market resulted in a big 5 percent rise in  index as all three Lasco listed companies recorded gains. The main market of the Jamaica Stock Exchange had a nice bounce with the rise in Caribbean Cement share price.
JSE intra 22-04-16The leading trades are Jetcon Corporation traded 575,835 shares at $2.50, Lasco Distributors with 190,500 units at $7.20, Lasco Manufacturing with 112,366 shares at $4.80. Cargo Handlers traded at a new high of $45.
After 75 minutes of trading on Friday, the market had an average of 59,318 units per active stock traded, compared to an average of 83,005 units traded in the mid-morning session on Thursday.
A total of only 22 securities accounting for 1,304,985 shares changed hands at 10.45 am as 8 stocks gained and 2 declined.
The market saw the all Jamaica Composite Index climbed 1,144.38 points to 165,649.14, the JSE Market Index gained 1,023.26 points to 149,161.81, the JSE combined index ended with a rise of 2,056.93 points to 159,518.65 and the junior market index rose 108.01 points to 2,057.22.

4 more Honey Bun shares

Honey Bun to split stock into 5 units

Honey Bun to split stock into 5 units

Honey Bun’s board of directors agreed to recommend at an Extraordinary General Meeting to be held in May 2016 a stock split for its shares. Accordingly, it is proposed that each ordinary share of the company be split into five shares.
The split will result in the Authorized Share Capital be increased from 97,500,000 shares to 487,500,000 shares of no par value, and the issued and fully paid capital of the company be increased from 94,253,390 shares to 471,266,950 of no par value.
Honey Bun reported a strong 175 percent increase in after tax profit to $45.3 million in the first quarter of financial year ending December 2015, from an increase of 42 percent in sales. The company enjoyed an increase in its gross profit margin of 47 percent compared to 45.4 percent in the 2014 quarter. Administrative, Selling & Distribution cost rose much slower than revenues at 21.5 percent over 2014. Earnings per share came out at 48 cents. Honey Bun earned 72 cents per share for the fiscal year to September 2015.
The stock last traded at on the junior market of the Jamaica Stock Exchange at $13.
If approved, Honey Bun will be the sixth junior market listed company to split their stock. Others that had a split are Access Finance and the three Lasco companies into 10 shares, and recently, Jamaican Teas into two shares for each one held.

Juniors rise again on Friday

Blue fell 95 cents on Friday.

Blue Power fell 95 cents on Friday.

The junior market rose 1.23 percent on Friday with advancing and declining stocks equalling each other, with low volume of stocks traded. The market rose 24.08 points to end at 1,984.03 with 15 securities trading of which 4 declined and 5 advanced. The market ended with 900,074 units changing hands, valued at $3,939,648.
At the close, 1 security ended with no bid and 5 securities had no stocks being offered for sale. There were 7 stocks closing with bids that were higher than their last selling prices and 3 ended with lower offers.
In trading, AMG Packaging closed with 2,784 units changing hands for a loss of 50 cents to close at $12.50, Blue Power ended with 2,406 shares changing hands with a loss of 95 cents at $10.05, C2W Music traded 50,000 units at 45 cents, Caribbean Cream gained 42 cents to close at $4.15 with 27,930 units traded. Carib Flavours had 27,930 units changing hands at $8.60, Caribbean Producers had 10,410 units changing hands to close at $4.85, JM sum 04-03-16Derrimon Trading had 8,250 units changing hands to close with a loss of 48 cents at $4.50, Honey Bun traded just 9,500 shares to close at $16.50 but the price reached an intraday high of $17.55 during trading. Jamaican Teas rose 30 cents, ending with 22,412 units changing hands at $6.80, KLE Group rose by 20 cents to $2.10 with 4,591 units changing hands, Lasco Distributors closed with 284,369 units trading, to end 9 cent higher at $5.60. Lasco Financial rose 5 cents to end at $3.06 with 280,642 shares changing hands, Lasco Manufacturing ended trading with 163,393 shares to close at $4 after falling 10 cents, Medical Disposables traded 1,000 units and closed at $3.50 and tTech traded 26,387 shares to close with a loss of 1 cent at $4.50.

Juniors rise – Thursday

Honey Bun closed at a new 52 weeks' high on Thursday

Honey Bun closed at a new 52 weeks’ high on Thursday

The junior market eked out a moderate gain on Thursday with advancing stocks just inching out declining ones by the narrowest of margins. The market rose 16.90 points to end at 1,959.95 with 14 securities trading of which 4 declined and 5 advanced. The market ended with 1,023,326 units changing hands, valued at $4,965,280.
At the close, 1 security ended with no bid and 5 securities had no stocks being offered for sale. There were 8 stocks closing with bids that were higher than their last selling prices and 3 ended with lower offers.
In trading, Access Financial gained 95 cents in trading 13,701 units to close at $16.50, AMG Packaging closed with 33,944 units changing hands at $13, Blue Power ended with 5,315 shares changing hands at $11, CAC 2000 traded with a loss of 1 cent to close at $7.35 with 8,703 units. Caribbean Producers had 3,905 units changing hands to close with a gain of 5 cents at $4.85, Consolidated Bakeries traded 122,015 units to closed JM sum 03-03-16at $1.60, General Accident traded 168,361 units to end at $2.80, Honey Bun gained $2.50 in trading just 2,000 shares to close at a 52 weeks’ high of $16.50. Jamaican Teas lost 50 cents, ending with 23,566 units changing hands at $6.50, Lasco Distributors closed with 489,879 units trading, to end 1 cent higher at $5.51. Lasco Financial fell by 19 cents to end at $3.01 with 30,250 shares changing hands, Lasco Manufacturing ended trading with 96,986 shares to close at $4.10 after rising 10 cents, Medical Disposables traded 100 units and closed at $3.50 and tTech traded 24,601 shares to close with a loss of 10 cents at $4.51.