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Top 10
STOCK PICKS for 2022
Investing in a Modern World Transform Your Everyday.
Top 10 Stock Picks for 2022
C O N T E N T S
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Investing In a Modern World
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Market Update and Economic Overview
Emerson Johnson Wealth Officer MEET THE TEAM
With over four years in the finance industry, Emerson is a warm friendly customer focused individual with a sense of pride in meeting and exceeding client expectations. He holds a BSc in Economics from the University of the West Indies along with certification in Project Management from the Mona School of Business and Management. He is an avid Liverpool fan and enjoys painting in his spare time. Emerson lives by the philosophy “You don’t have to be great to get started, but you have to get started to be great”.
Term to Know
Cryptocurrency Is a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography (the science of hiding information), rather than by a centralized authority.
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When You Win,
We Win!
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n 2021, our team of experts handpicked 10 top stocks to help you grow your portfolio. Nine of our ten picks returned excellent results. If you invested in these stocks, then you’re already enjoying great returns and are well on your way to building your wealth.
If you missed out on last year’s picks, don’t worry. There’s still time to make your dreams come true in 2022. Take advantage of our 2022 picks and start creating a winning portfolio. Check out our top stock picks and the analysis behind these picks. Your Wins are Our Wins. Let’s get you Growing.
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Consumer Goods Take the Lead Jamaica Broilers Group Jamaica Broilers Group (JBG) enjoys strong brand recognition and island-wide reach; and has experienced strong growth in revenue from the USA market to sustain growth amidst some degree of market saturation in the Jamaican market. The company also has potential of upside to earnings per share from normalization of gross margins as supply constraints abate; as well as inelastic demand for its products.
Wisynco Group (WISYNCO) Wisynco Group has a substantial cash reserve and low debt, which create strategic flexibility. In addition, it had an encouraging 75% export growth in its last quarter; and developed a new facility in Hague, Trelawny which is expected to contribute to greater efficiency in serving the surrounding region. The manufacturing sector is expected to continue yielding positive returns and commendable margins. However, close attention will have to be placed on the rate of increase in shipping and freight costs, which have contributed significantly to the increase in aggregate prices. The recent increases in inflation have been mainly driven by upticks in the prices of the food and beverages, and this is expected to continue within the near-term.
Jamaica Producers (JP) JP, Eppley and French Company, Vinci Construction Grand Projects (VCGP) intend to form a Special Purpose Vehicle to build, design, operate, finance, and maintain a 15-million-gallon treatment plant in St. Catherine. The project is estimated to cost around US$60 million. Once completed, water produced by the plant will be sold to the NWC under a purchase agreement. We believe that JP has enough liquidity and is well capitalized to take advantage of this opportunity and other projects of this nature.
Future Energy Source Company (FESCO) With the opening of new service stations and a head office, along with the reopening of schools and the lifting of the work-from-home mandate by the government for public sector workers, Fesco will be in a unique position to sell more fuel to its dealers and customers as demand is set to increase significantly. 5
Honey Bun Jamaica Ltd (HONBUN) Between August and September 2021, in separate transactions with a combined value of approximately $150M, JMMB Securities and Cals Manufacturing became the respective fifth and sixth largest shareholders of HONBUN following the purchase of large blocks of shares in the company. HONBUN, which has been one of the Jamaica Stock Exchange’s best performing stocks year-to-date, saw Revenue for its FY ended September 30, 2021, increase by 28.10% to $2.15B, surpassing $2B for the first time. This performance was on the back of growth in local and export sales. Net Profit for the period was up 31.15% from $166.75M to $218.69M.
FosRich (FOSRICH) We expect the construction sector to remain robust for the near-term on the back of ongoing public and private developments across the island. Lending rates are likely to see some marginal upticks in the near term which would essentially increase the cost of borrowing to fund projects, however, the expected increase within this timeframe is likely to have minimal impacts on the velocity of funding. FosRich is expected to benefit from the booming construction sector.
Fontana (FTNA) Fontana Limited recently announced that it successfully raised $500M in additional capital via private placement, as the company moves forward with its plans to develop a warehouse and distribution centre in Kingston, a new store in Portmore as well as to explore acquisition opportunities as it grows its brand. Having concluded its most successful FY in June, Revenues for the first quarter of its 2021/22 FY grew by 17.33% to $1.31B versus the $1.11B for the comparable period in 2020. Gross Margin for the period declined from 35.46% to 33.78% as the company continues to absorb inflationary increases in freight, delivery, and other charges caused by supply chain disruptions due to the coronavirus pandemic. Net Profit for the period was up 35.19% to $61.13M.
Lumber Depot Limited (Lumber) Demand remains strong within the construction sector despite the pandemic. In fact, the sector has proven resilient in the face of the economic shake-up of the past two years. The sector also benefits from substantial cash reserves and limited debt which creates strategic flexibility. Despite the company’s conservative risk profile, they’re managed to achieve in excess of 50% growth for the financial year to date. While we expect this high level of growth to moderate over the next 5 years, we see the momentum in the broader markets served by the company driving above average
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Creative Makes a Strong Appearance Limners and Bard (The Lab) For the nine (9) months ended July 31, 2021, LAB saw its Revenue increase from $686.15M to $942.02M or by 37.29% when compared to the prior period in 2020. This growth was driven by growth in its production and media placement segments by 62.20% and 39.40% respectively. Net Profit for the period increased by 31.87% from $107.81M to $142.18M largely due to a 462.22% increase Finance Income. We anticipate that the company will continue to improve on its performance in the near term as the outlook for the media and production space is positive at this time.
Veteran Leader GraceKennedy (GK) GK continues to produce a solid performance on the back of improvements in all business segments coupled with greater operational efficiencies. For its third quarter ended September 30, 2021, GK realized a 26.34% increase in Net Profit to $6.23B versus the $4.93B reported for the same period in 2020 amid an increase in Revenue of 11.20% from $86.13B to $95.78B. GK has performed well despite the current economic environment, and we expect this to continue in the nearterm largely on the back of inorganic growth measures currently being pursued. 7
Investing in a
Modern World: 8
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he world is vastly different now than it was 60 years ago when investors like Warren Buffet started making a fortune on the stock market. If we compare stock market trends of today to even 10 years ago, a lot has changed. With a significant increase in technology, dissemination of information, the evolving ways of earning income, and automation, investing in a modern world requires a different mind and skill set when compared to prior decades. Some of the key principles of investing still rings true and should be used today, however investing in this era comes with greater challenges. When The Jamaica Stock Exchange opened its doors in 1969 to promote orderly trading of listed stocks and securities, only a few investment houses were already established and serving the Jamaican populace. VM Investments would become a key player in the investment space almost two decades later. With several new investment houses emerging since, and ease of access to information, new investors are often overwhelmed with the constant overflow of information and decision fatigue. Weighting the pros and cons of who one’s investment partner should be, portfolio composition, when to buy and sell especially as we no longer wait for quarterly results to acquire information on listed companies. The internet and social media have made it relatively easy to know what is going on strategically with a company before formal statements are released. So how do we filter this overflow of information to take what we need for investing? 1.
Do your research, which includes reading the research highlights and articles put forth in the market by the companies and all the investment houses. Different analysts have varying perspectives on what is happening in the market and the next best move. It is imperative your source of information is trustworthy and diverse, which allows deeper understanding of the market and critical thinking when making decisions on
investing for the best strategies to grow your portfolio. Filter out the noise by sticking to tried and proven trustworthy sources and personnel, however, ensure adequate research is done before concretizing investment decisions. 2. Establish a solid but flexible investment strategy in conjunction with your investment advisor and have a clear plan of action for 12 months with monthly and or quarterly reviews. The next best trend is always around the corner, but trends go as easily as they come. Your investments should not be done on a whim but deliberate and calculated planning following in depth research. When building a stock portfolio, based on your goals you will attribute a percentage of your portfolio to dividend paying stocks, growth stocks, defensive stocks and IPOs. Your allocation will vary based on your goals, which for most people will change as different seasons of life come with different goals, thus it is imperative one is flexible with the process. Over the last decade, younger investors were not solely focused on companies’ profits as what obtained a few decades prior. They are demanding that company’s look beyond profits and be strategically aligned to causes which contribute to a sustainable planet and way of life genuinely. New investors are insisting that the companies they invest in and with care about the things they are passionate about and assist with solving societal problems beyond their business model. This new demand from younger investors has cemented Corporate Social Responsibility for the long run. Companies may soon be required to include in their financials contributions to key societal development programs and the impact on the environment. Investing was and still is one of the best ways to earn wealth sustainably, however as the society evolves, the drivers of investing also evolve and bring with them, new sets of challenges. Written by: Roxanne Christian-White Assistant Manager - Lending Solutions
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Market Update and Economic Overiew December 2021
Fixed Income In December, the Government of Jamaica (GOJ) issued only one bond, compared to re-tapping three in the previous months, in a bid to raise money to finance its fiscal requirements. The GOJ opened its 8.50% 2061, fixed rate bond on December 21, 2021, at a total offer valued at $5.80 billion.
Money Market The BOJ implemented a further rate hike of 50 basis points, which saw the overnight policy rate increasing to 2.50%. The next rate consideration is scheduled for February 18, 2022, and the central bank has advised that further increases may be implemented if warranted. Long-term placement was impacted by the BOJ’s rate hikes throughout the year, as brokers were more careful with their liquidity due to interest rate uncertainty.
Equities The local stock market continued to gain momentum in 2021, following the fallout from the of the corona virus pandemic in 2020. Throughout the year several IPO’s and APO’s were opened, some of which were oversubscribed. At the end of the year, the Jamaica Stock Exchange’s (JSE) Main Market index grew 0.14% YTD, the Junior Market jumped 29.69% YTD, while the Financial Index fell 3.96% YTD.
Foreign Exchange According to the Bank of Jamaica’s (BOJ) Weighted Average Selling Rate (WASR), the JMD appreciated 1.02% after gaining $1.58 against the US Greenback in December, ending the month at $155.09. The Bank of Jamaica (BOJ) provided no additional supply throughout the month. During the course of the month, demand for the US dollar subdued marginally. Nonetheless, demand continued to outpace supply.
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