FROM LEFT ARE: RICHARD BYLES First Life, PETER JULY RBTT, JOHN MAHFOOD, H&L.THE MARKET has been characterised by profit taking during this week, making several stocks attractive at this time.
We are, however, in the season of the release of results and investors would do well to take a position in the stock market. While some declines were as a result of profit taking, some were reflective of the price correction of overvalued stocks. Care must therefore be taken to identify the differences when selecting stocks.
Merger agreement looms
On Monday, November 8, 2004, the shareholders of First Life will meet to vote on the transfer of their insurance portfolio to Life of Jamaica (LOJ) in return for shares in LOJ.
This move will limit the operations of the company to property management only and will significantly reduce the expenses of the company. Meanwhile, they will share in the increased profitability of LOJ from economies of scale.
Looking past the figures
The Royal Bank of Trinidad and Tobago (RBTT) results were like an engineer's dream completely flat. The growth that the bank enjoyed over the six months ending in September was eroded by the unrealised losses from the downgrading of the Grenada Bonds.
A further precaution was taken as RBTT made a provision for future possible losses which further reduced the profitability over the quarter. This, however, is a one-off item and in the coming quarters the Trinidadian bank expects a return to growth.
Long-term
favourability reaffirmed
For the nine months ended September 2004, Hardware and Lumber (H&L) reaffirmed the logics and rationale behind the decision to merge and form one of the largest hardware and retail distribution networks in the island.
All categories in the statement of income and expenses saw improvements of at least 100 per cent, portraying the magnitude of H&L's growth as a result of the merger. Retail and wholesale divisions lead post-merger synergies.
Estimates of the damage done to the country's agricultural/livestock sector are in the vicinity of $8.5 billion. However, this may come as an opportunity, as the sector gradually retools itself and returns to productivity. H&L will play its part in the country's rebuilding process through a donation to the Office of National Reconstruction, as well as acceptance of government issued vouchers for farmers who suffered losses or damages. Though these present a cost to the group now, there could well be benefits to the goodwill garnered through this gesture to complement their efficiency gains in the long run.
For further information on these and other stocks, please contact DB&G's Stockbrokerage department at 1-888-CALL DBG.