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The immaculately manicured NCB Atrium, on Trafalgar Road in St. Andrew.
Keith Collister, Contributor
DECIDING WHAT are the best stocks to invest in can be a tough call, so last Friday, The Financial Gleaner invited some of Jamaica's leading stock market experts to do just that.
The experts included stockbrokers and analysts from six of Jamaica's 11 brokerage houses (Barita, First Global, Mayberry, Dehring Bunting and Golding, Pan Caribbean and NCB Capital Markets), former equity trader Mario Watts now at major commercial bank RBTT, and independent financial analyst John Jackson. These experts were asked to choose their five top long-term stock picks, with long-term being defined as a period of up to five years.
SIMILARITY
Perhaps, unsurprisingly, in view of the limited number of companies listed on our stock market, there was a fair amount of similarity in the picks of the representatives from the seven securities dealers. All seven securities dealers representatives chose National Commercial Bank (NCB), while all of the representatives other than Mayberry's Wade Mars also chose Life of Jamaica (LOJ). The greatest variation came from the choices of well-known financial analyst John Jackson, who chose two companies, Guardian and Capital and Credit, not mentioned by any other analyst.
Barita's Patrick Crowl chose Bank of Nova Scotia (BNS), Caribbean Cement and Surpreme Ventures as his remaining picks. Asked as to why he chose the currently out-of-favour Surpreme Ventures (he was the only person to choose this company), he argued the company's monopoly and regional growth prospects made it a good long-term buy.
Graces' subsidiary First Global was represented by their equity trader Nielson Rose, whose other picks were BNS, Desnoes and Geddes and Pan Jamaican Investment Trust. As the only person from the group who chose Pan Jamaican, Mr. Rose justified his choice on the basis of the earnings from Pan Jam's investment in Life of Jamaica, good valuation and technicals (e.g. stock was trading well) and their dividend.
STOCK PICKS
Mayberry's Wade Mars was the only person to make only four stock picks. Besides every securities dealer's favourite NCB, he chose Caribbean Cement, Carreras and Lascelles. Lascelles was actually the third most popular choice after NCB and LOJ, chosen by four representatives from the major securities dealers, and unlike the top two picks, was also chosen by independent financial analyst John Jackson. His justification for his choice of Lascelles was their core rum business, in which he saw good long-term value.
Dehring Bunting and Golding's Vernon James other picks were Lascelles, Carreras and his own company Dehring Bunting and Golding (DB&G). While admitting that the market in Jamaica was becoming mature with respect to their core fixed-income business, he argued his company DB&G was cheap relative to its peers at its current price of six-times earnings, had strong management and good regional expansion prospects, particularly in Trinidad.
VERY STRONG MANAGEMENT
Pan Caribbean Financial Services's Audrey Williams also liked DB&G, as well as Lascelles and her own company Pan Caribbean Financial Services (PCFS). She argued that the entire group, including LOJ and Sagicor, had very strong management, and that the group's regional footprint gave it phenomenal growth prospects. In her view, the additional business just from Sagicor's existing presence in Cayman, Barbados etc., was potentially huge.
RBTT's Mario Watts' other picks included DB&G, D&G and he was the only analyst to choose his own company RBTT. He argued that what he described as his "very aggressive" group was already strong in core banking and structured "capital markets" products, had new technology, and very impressive expansion plans. He saw the group's principal competition as coming from Republic Bank and First Caribbean.
NCB's Vivian Bedassie's other picks were Carreras, Lascelles and PCFS. His reason for choosing as a pick his own company NCB was good earnings prospects, and prospects for multiple expansion (he believed his company's growth prospects justified a price earnings ratio of 12 -15). He described the company as in an acquisition mode, e.g. Blue Cross, and already possessing good assets.
Financial analyst John Jackson had the most varied picks, which included Lascelles, DB&G, Carreras, Capital and Credit and Guardian. He argued that Trinidadian Guardian Holdings had probably been the fastest-growing financial conglomerate in the Caribbean for many years. While he was not yet sure of the quality of the new "expatriate' management, under normal circumstances their stock was probably undervalued. In any case, he believed that due to its base in Trinidad, the group could not help but benefit from Trinidad's growth, and should therefore be a buy.
Along with representatives of the Jamaica Stock Exchange, the experts were invited to a Gleaner Editor's forum on the state of the Jamaican Stock Market at the Gleaner's downtown Kingston office.
