GraceKennedy, several Announcements to Reflect on…
GraceKennedy Limited (JSE: GK) has really been on the move lately… They have released a flurry of announcements to the JSE, Jamaica Stock Exchange. GK makes it clear that the Company is now in its 101st year of operations, as they recently concluded the GK100 milestone. Here is some insight:
Scotia Group Jamaica, continues to trade below 10x P/E on the back of 35% Earnings Growth
SGJ’s Balance Sheet: Loans, Net of Allowance for Credit Losses hit J$ 237.7 billion
Scotia Group Jamaica Limited (JSE: SGJ) stunned the market, and got back to its winning ways, with above average earnings growth for its last audited financial reporting period, ended October 31, 2022.
SGJ reported, earnings growth of 35%, year over year, with earnings per share surging to J$ 3.75 versus J$ 2.78. SGJ back to their historical numbers and winning ways! This is the year now, 2022/ 2023, to see if SGJ continues and repeats this. That is what the market, and Mr. Market wants to see.
Is the Dow Jones heading to 25,000 Points, next stop? As we Touchdown at 30,000 Points & Below?
Opportunities in the Slumping U.S. Markets
We got that brief feeling of “all was well”, the bit of sunshine before the storm, with the Dow Jones rebounding to 31.5k – 32k, even as high as 33k points, then “Boom”, came the fall, we wrote about this potentially happening recently at ItsMoneyMark, the Dow Jones at 30k???
Finding the Lower P/E Ratios, or Potentially undervalued JSE plays that Remain
Jamie Dimon, the famous head of CEO JPMorgan Chase, recently came out with the statement, that we should all brace for an “economic hurricane.” It is not shocking as several financial analysts and economists in the U.S. have signalled this as an expectation from earlier in 2022. We tend to agree with Dimon, and while none of us have a crystal ball, or can time it, you need to take even greater care in your investment oversight for the 2nd half of 2022 and into 2023.
BoJ Rate Increase and Market Valuations
The next policy interest rate decision is set for June 29, 2022, and it seems only headed in one direction with two (2) things happening, (a) the latest decision, effective May 20, 2022, raising the rate by 0.50% to 5.00%, and (b) the inflation rate April 2022, coming out at 11.8%. As a consumer, although this is the formal inflation rate, based on food prices, the gas pump, and the practical day to day, inflation practically just feels a bit higher, and more like 20% +.
Recession Possibilities in the U.S. and the Ensuing Impact
As the famous saying goes, “When the U.S.A. sneezes, we in Jamaica catch cold.” So, far Jamaica has been quite alright, given the Dow Jones, S&P 500 are well off their highs, however the JSE – Jamaica Stock Exchange continues to climb higher. From a stock market standpoint singularly, Jamaica is doing well, and no cold or flu yet. We are in the inverse phase even more so, if you take a sample size of U.S. big tech, and big market caps with some as much as 50% or more from their highs, and then with recent Q1 earnings reports (March 2022) released on the JSE, sending similar local big market caps, flying by as much as 100% or doubling their share price. Cases in point, (a) Mayberry Investments (JSE: MIL) & (b) Supreme Ventures (JSE: SVL).
We can add another sleeper to the mix without over-doing it… Sagicor Select Funds, Manufacturing & Distribution (JSE: SELECTMD). Although we think from our investment cultural perspective because we are unique, the SELECT listings need a “face” as Jamaican investors are having difficulty differentiating between unit trust, collective investment schemes, and these listed quasi-ETFs (exchange traded funds). We still tend to prefer and understand, a straightforward company, which is easy to understand, sells a product or service that we consume, etc. Like the adage, we tend to invest in what we clearly understand. This has not changed over time, and more than likely will not.
PROVEN Investments Limited (JSE: PIL) like many other listed “investment companies” share price struggles have been “real” as really, it is the psychology of understanding the business model or the company for the wider market. An institutional investor or retail investor prefers to purchase GraceKennedy, Derrimon, Wisynco, and the list goes on of not only something they can “feel” or even “eat” but something that they understand easily… Its all about understanding clearly what you invest in…
Opportunity, opportunity, opportunity… Despite all the “blaze” about Lumber Depot, Fontana Limited, Spur Tree, and a few others in the past week, remember there are 8 billion people out there, and a lot, a lot of market cap globally.
The TROPICAL Battery Company Limited: A bit on the Cheap, Heading into 2022 for your Portfolio
Tropical Battery Company Limited (JSE: TROPICAL) has reported an extremely strong profit for the year, coming in at +203% year over year. TROPICAL has always been known historically as a high volume/ turnover business with low net margins. Over the past few years, and particularly since listing, the Directors & Management, clearly have been assiduously working on getting the margins right sized and the results are now showing the hard work.