After a mixed performance in 2021 between the Main and Junior Market of the Jamaica Stock Exchange (JSE), several brokers and analysts have outlined their picks for 2022.
Mayberry Investments Limited has been most public with their picks with its 2021 selection returning 49.5 per cent up to December 14 as an index. These included Medical Disposables and Supplies Limited, Caribbean Cement Company Limited (CCC), JMMB Group Limited (JMMBGL), Radio Jamaica Limited (RJR), GraceKennedy Limited (GK), Mailpac Group Limited (MAILPAC), Lasco Distributors Limited (LASD), Lumber Depot Limited (LUMBER), FosRich Company Limited (FOSRICH) and Jamaica Broilers Group Limited (JBG). Of these ten companies, only JBG saw a price reduction in 2021 with five of the stocks being the among the best-performing stocks in 2021. The JSE Index only rose by 0.14 per cent to 395,155.61 points while the Junior Market Index rallied by 29.69 per cent to 3,428.30 points. The USD Market climbed by 4.94 per cent to end 2021 at 195.51 points.
Mayberry has released their select nine choices for 2021 which included the price-to-earnings (PE) ratio of the companies. These included JMMBGL, Carreras Limited (CAR), Supreme Ventures Limited (SVL), LUMBER, Fontana Limited (FTNA), Wigton Windfarm Limited (WIG), Jamaica Producers Group Limited (JP), Caribbean Producers Jamaica Limited (CPJ) and GK. Most of these companies experienced either improved revenue or net profit in 2021 and are titans in their own right.
In outlining its rationale for CPJ with a PE of 82.03 times, the presentation stated, “Since the outbreak of the pandemic, the company was able to recover and reposition itself to take advantage of the opportunities that the tourism industry presented. Even with the uncertainty caused by the new variant, the tourism industry remains a vital component of Jamaica's economy as the company remains the largest supplier of food and beverage to the hospitality sector.”
NCB Capital Markets Limited (NCBCM) remains a little more optimistic for the stock market for 2022. It supported this outlook based on the gradual recovery in the economy and continued enhancements by businesses to mitigate the risks presented in 2021 by COVID-19. NCBCM highlighted that stocks with exposure to tourism, construction, manufacturing and distribution and some financial stocks should perform better with rising employment and private consumption. Even amidst this confidence, NCBCM expressed caution on the expected market recovery.
“With investor confidence and market performance being positively impacted by economic and financial performance, this should fuel a stronger investment climate that is conducive to new IPOs, APOs, and cross-listings, as well as an improvement in the market indices. However, while we anticipate a rebound in market activity, we do not expect stock indices to surpass their pre-pandemic levels to reach new highs in 2022,” the NCBCM report stated.
The report went onto further discuss the improved bottom line performance of companies arising from their need to sustain and continue operations from the ongoing pandemic. Under the 'new norm', many companies are expected to capitalise on opportunities to extend their market share, diversify revenue streams and transform existing business models to grow their operations in 2022.
“Within the context of these uncertainties, we anticipate market volatility will continue in the quarters ahead. However, as we continue to operate in this environment, we encourage investors to separate the noise from critical information and focus on the fundamentals of the companies and assets when making investment decisions,” the report added for the upcoming earnings season of many companies.
Icinsider.com, which is run by blogger and chartered accountant John Jackson, reported a 64 per cent average gain for the top 15 Junior Market companies while the top 10 Main Market stocks saw an average gain of 10 per cent for 2021. With the market gaining more confidence and interest following the mass sell off in 2020, Jackson projects that the Junior Market could gain 60 per cent with the Main Market to have an expected return of 14 per cent in 2022.
“The country should see a full recovery from the important tourism sector during 2022 and this publication expects greater flows of foreign exchange with tourism back to normal and remittances holding close to the trend of 2021. Unemployment will dip further in 2022 as most of the economy is expected back to near normal operations that will add to the spending power of Jamaicans and help to lift revenues. The economy is clearly on the mend but there are still lingering concerns with the inability to seriously reduce the spread worldwide as well as in Jamaica. The latest Omicron strain is an example that we may not be out of the woods as yet. The ongoing vaccination of the population in Jamaica, although not going as fast as planned, continues apace and could support general positive expectations for the near term,” stated Jackson's articles.