Dennise Williams, Staff ReporterMANY PERSONS are looking to maximise the return on their investments by placing funds in various stocks listed on the Jamaica Stock Exchange (JSE).
The JSE is looking especially good in light of the fact that money market interest rates are a tepid 14.85 to 18.50 per cent. Considering that inflation is 15.1 per cent and depending on how long you leave your money on deposit, you are either being wiped out by inflation or barely making it by.
Now consider the returns posted by stocks listed on the JSE and supplied to Sunday Business by Karen Fitz Ritson, financial analysis and director of Fitz Ritson and Associates. She states, "Below is a list of the top performing securities from the beginning of January 2 to February 27, 2003."
STOCK RETURN
BNS 44.483%
CMP 50.502%
First Carib Inter Jamaica 45.556%
First Life Ins 42.857%
Jamaica Broilers 62.963%
JMMB 44.571%
Kingston Wharves 84.615%
Lascelles 61.029%
MoBay Ice 66.667%
Palace 48.000%
Pan Caribbean Fin. 43.939%
Pan Jam 64.950%
Pegasus 170.588%
These returns definitely beat the money market. But how do you know which stocks to buy? Again, Ms. Fitz Ritson offers assistance. She has listed some of the stocks and sectors that she believes will be 'hot' in 2004 and the reasons why.
THE FINANCIAL SECTOR
1. With interest rates coming down the banking sector looks very good. Retail loans are where they can make their business and this has grown for RBTT, BNS and NCB. Note that BNS has already recorded a very impressive first quarter performance.
2. Banks today are improving their efficiencies because the focus is customer-centricity. They are investing in staff training to enhance performance and upgrading their systems to make the delivery of their product timely.
3. With pending mergers and acquisitions, with the promise to increase capital base, funds under management, diversify product base this makes companies look very attractive so people anticipate a good performance. Caution to the wise, mergers and acquisitions usually have a lot of cultural barriers, if these are not handled properly there can be a lot of internal "falling out". We have seen this in the past with NCB and Mutual Security Bank. It took years before they recovered.
CROSS-LISTING
All cross-border-listed companies are in positions to perform well, if our exchange rate position further weakens. Where all indications illustrate this then these companies will perform.
GRACE, KENNEDY, DESNOES
AND GEDDES, LASCELLES
These three companies look very hopeful as they have the right fundamentals and have positioned themselves in the international and regional markets in order to earn foreign exchange. Grace is aggressively marketing their Caribbean Fixed Income fund with the hope to launch more mutual funds this year. D&G has spent a lot of money to upgrade its plants therefore as long as the demand is there they too will make a good profit and Lascelles is also poised for growth in the international market. To enter the market at a good entry point is to purchase these stocks.
JAMAICA BROILERS
This company could be branded as a 'dark horse' as it is quietly making an impact. Over the past six months it has grown 100 per cent and its 43 per cent improvements in profits over the nine month period makes it very attractive. Note that 69 per cent of its net financial costs have been reduced, which has positioned the company better. Although Mad Cow disease and other animal-related diseases have made their performance attractive in the short run. If it continues on the same path it will perform in the long run. An attractive buy.
Although speculation and the investors' perception will drive the performance of stocks in the short to medium term, one has to look at the fundamental performance of these companies to assess where the true winners will be. As you can see there are a lot of companies that are poised to do very well this year.
