The question everyone is asking is, will there be stability in the calendar Q4 or a blood bath in Jamaica? Where will the local markets be?
Either way, its time to hold cash. If you are looking at the J$ stocks or stock market, be extremely selective right now and look at our recently published pivoting and being active COVID portfolio – the Super 6 Portfolio… Its about being active right now, and not just sitting and holding and hoping for a miracle
Let us go over this real quick for this week:
(1) Election season and September 3rd, 2020 date, will lead to a few uncertain trading days and potentially further pullbacks, always does historically.
(2) The FX continues to devalue, now above J$ 150, perhaps will decline further
(3) Quarterly results and YTD results continue to be horrible with mostly blaming the Pandemic.
a. Creating higher Price-to-Earnings ratios, etc.
(4) The Pandemic has weakened the Economy for the longer than expected…
We are going to repeat the last point for everyone… The Pandemic has weakened the economy for longer than expected. If so, and we believe that, then stocks need a further pull back. So, what is keeping them up?
Low, low and lower interest rates of 0.5% by the Central Bank similar to the US Fed, continue to give no options for institutions or pensions to seek other options or higher yields… it will keep money in the stock market and a result keep prices stable… besides a small pullback on small volumes in March / April 2020, we have seen nothing to date… Not even with poor results, losses, etc… no sell off…
We do not think you will…
Where are some Opportunities as it wouldn’t be as easy as before to just Buy IPOs or Buy across the Board of the JSE? Look for where there might be some M&A or companies that can buy up other companies if there is a blood bath coming into Christmas or early next Year in 2021:
(1) (GK): Food is King now even though in the Quarter before the June 2020 Quarter there was a sharp spike that will normalize in the June 2020 Quarter and moving forward.
a. We see this sector consolidating and M&A happening.
b. Be on the right side of this. Be on the stronger support and stronger bid side companies and companies with “cash” or “cash reserves” for the next 3-12 months.
c. Grace, even though it has lost its Ketchup King status to Cal’s is ready to Boom again, the stock is down almost 18% to Date, it should be Up
(2) (INDIES): Indies Pharma looks like it is getting ready to unseat the Giant in Lasco in 2021, be on the right side of this, and Indies Pharma has strong financial partner in GK Capital and Sagicor
a. We mean, who would not want financial partners like this during COVID
b. The stock is down almost 13% to Date, it should be Up
(3) (MAILPAC): Mailpac Group can really be like a machine that keeps eating for late 2020 and into 2021. The results while not huge, are getting the foundation right and were solid for recently listed Company.
a. Think about a local Amazon, that will just get bigger.
b. The stock is down almost 4% to Date, it should be Up
We will keep looking at (SEP): Seprod, but they may have bought up all their plays already, we keep watching, but they have the might to be more mighty especially if the market or competitors weaken…
(NCB FG): NCB Group as usual could just be that sleeper, that keeps quiet, keeps their head down and always gets it down, they seem to be the one financial stock that may again get it done and pop, but we may prefer to get in around J$ 80-J$ 100/ share, if the final quarter gets to where COVID could take us and some of the potential economics.
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