Month: January 2018

In December 2017, the Board of Directors of Cable and Wireless Jamaica, [JSE: CWJ], received an offer from CWC Cala Holdings Limited wanting to purchase over 3 billion shares from minority shareholders. CWC is a subsidiary of Liberty Global, the parent company for Cable and Wireless Jamaica. CWC Cala Holdings Limited along with Kelfernora Limited currently holds 82% shares in Cable and Wireless Jamaica (CWJ).

Despite the current legal battle before the court concerning the offer, Cable and Wireless Jamaica (CWJ) Directors are urging shareholders to accept the offer; which is logical. If the company receives 90% or more acceptances, then the law allows for compulsory acquisition of the remaining shares. If this is achieved then an application will be submitted to have the stock delisted from the market. Even if the company receives less than 90% acceptances but still meet the delisting threshold, they can still apply for the stock to be delisted; which will profoundly affect shareholders who did not accept the offer.

The offer which expires January 31, 2018, is priced at $1.45. Bearing in mind, Cable and Wireless Jamaica’s (CWJ) stock price, at one point in 2017, did increase to $1.80.

Do you think $1.45 is a fair enough price to sell CWJ?

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The success of any stock is partly dependent on a company’s leadership. Poor leadership can result in declining profits and investors’ confidence in a stock just to name a few. While Uber Technologies Inc. is not on the market as yet, it has already fallen victim to poor leadership. The former CEO of Uber, Travis Kalanick is described as an egotistic jerk, self-centred, and melodramatic.

With a series of scandals and public backlash, Uber’s reputation has suffered a great deal, included spying on passengers, unreliable driverless car experiments and numerous sex scandals about Kalanick. This was compounded by the various bad decisions Kalanick made, some on a whim.

In February 2017, an engineer who is a former employee of Uber, Susan Fowler, wrote an article on instances of sexual harassment she witnessed at Uber. Kalanick was pushed to take legal action by investigating the claims made by Fowler which negatively impacted the reputation of the company.

Moreover, Uber made many enemies. The saying ‘Your friend can be your worst enemy,’ is a representation of the outcome of the close-knit relationship between Google and Uber.

In 2013, Google invested significantly in Uber and by 2017 owned billions in the company.
In an effort to compete with Google, Uber purchased Otto, a self-driving trucking startup. Uber knew Google was Otto’s rival; a company which comprised mainly of former Google employees.

The CEO of Otto, Levandowski, also a former Google employee, was found to have stolen five disks from Google which contained information on Google’s driverless project. Kalanick who allegedly knew all this information went as far as defending Levandowski to his board and wanted to protect him from Google’s lawsuit.

It is evident that Kalanick’s judgement had deteriorated over time and he no longer was the right fit for CEO. These series of events, among others, ruined the company’s reputation, declining business and employee morale.

Uber’s new CEO, Khosrowshahi, is said to be the complete opposite of Kalanick, has an enormous task ahead in salvaging Uber’s reputation as it seeks to list to list on the market.

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The U.S. stock market is having a good start to 2018.
And so far we see several underdogs push forward in the stock market race. One of which is Cisco Systems [NYSE: CSCO], the IP-based networking company. Cisco has outperformed the industry consistently and is poised to continue with a revised price target from $37 to $44, 10% upside.

Cisco is the largest player in the networking space with a strong presence in the router, WLAN and Ethernet switching. The data centre market is solid with room for expansion into relatively under-penetrated markets, will continue to drive growth.

With the new tax reform expected to repatriate US$ 48 billion, that cash could go to dividend increases, for which Cisco stock already yields close to 3%.

We recommend investors take a look at a stock like Cisco.

At the very least, it’s one to watch as we believe Cisco stock has a reasonable valuation, good dividend yield and positive catalysts.

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The U.S. markets are all about beating records highs this year.
As the fourth-quarter earnings are released, U.S. banks are showing stronger than expected results.

JPMorgan & Chase Co. [NYSE: JPM], despite experiencing a fixed income slump, have been reporting rising net income on a year-over-year basis. We expect rising interest rates to continue to support JPMorgan’s revenues as well as the lower tax rates.

Berkshire Hathaway Inc. [NYSE: BRK.B] shares have gained 25.1% in a year and outperformed the industry by 20%. Berkshire’s biggest asset is still Warren Buffett. His unique skill to create tremendous value for shareholders over the last 50+ years creates positive market sentiment for the companies he is in involved with.

Wells Fargo & Company [NYSE: WFC] shares have also outperformed the industry, despite the scandal. The San Francisco native bank has been focusing on rebuilding its reputation and cost-cutting measures. WFC is one of the largest financial services company in the U.S. with $1.9 trillion in assets and $ 1.3 billion in deposits.

Our analysts are expecting the corporate bottom line of S&P 500 companies to rise by around 15% over the quarter, with a focus on whether 2018 projections will be supported by last year’s overhaul of the U.S. tax system.

Given the strong fundamentals and the bullish trend, we expect U.S. Banks to have an outstanding year in 2018 and encourage investors to pay special attention to those undervalued stocks in the financial sector.

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Danmark-based drugmaker Novo Nordisk [NYSE: NVO] made a takeover offer of 2.6 billion-euro ($3.1 billion) bid for Belgium’s Ablynx [OTC: ABLYF], to beef up its lesser-known blood-disorder unit and rekindle growth.

NVO, a global leader in the diabetes market, hormone replacement therapy and obesity, offer signals a higher need for medications that target rare diseases. The most promising is Ablynx’s caplacizumab  which is poised for approval this year for an unusual disorder in which blood clots form in small vessels throughout the body.

Novo stock price rose by 49.3% in comparison to the industry’s gain of 15.2%. The Ablynx stock has almost doubled since the beginning of 2017.

The takeover proposal comes as Novo faces increased competition in diabetes. Though the market for drugs is enormous, around $40 billion in sales, generic drugs remains a threat.

With that said, we remain bullish on NVO as our outlook remains positive.

Do you agree?

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With competition from online stores such as Amazon and Alibaba, consumer goods companies like Procter and Gamble Company [NYSE: PG] has to pump more capital in innovations, marketing and investment to counter a softening industry.

P&G is known for its strong brand recognition and diversified portfolio. The company’s shares have outperformed the industry in the last six months and currently trades at US$90.47 on the market below its fair value of US$96.

The Cincinnati native has not been garnering any much enthusiasm among investors. The stock’s momentum has been very slow and is quite evident in its trading volume on the market. Over the past month, PG’s trading volume was 7.94% below its usual volume over the year.

Measuring PG’s volatility on the market would allow an investor the opportunity to decide whether this stock is a good buy or not, based on one’s risk appetite and ability to accept losses.

A stock beta is used to measure a stock’s volatility. If a stock’s beta is below the market beta, then this means the stock is less risky, and there is not much movement in the stock price.

The lacklustre performance of a stock price tends to turn off a lot of investors, and with a beta of 0.48 and market beta of 1, Procter and Gamble can be considered as a non-volatile stock.

There is no doubt that PG performed well on the market in 2016 as their financials can prove it.

Pretax margins, which is a company’s earnings after they have paid all operating costs, increased by 20% from previous years.

The unexpected improvement made investors optimistic that 2017 would have been even better but it was not. The pretax margin for 2017 was the same 20%.

Do you think 2018 will be any different?

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With an over 70% increase in stock price for 2017, Caterpillar Inc. [NYSE: CAT], is now classified as a stock poised for greatness on the market for 2018. CAT is currently ranked number 1 in the Industrial Machinery Category of the stock market out of 52 securities.

Caterpillar is a manufacturer of mining and construction equipment, engines and turbines. CAT’s performance can be attributed to a strong demand for machinery in the US, cost control efforts and its vigorous sales through exports.

At the end of trading yesterday, CAT was trading at US$161.96 but has now increased to US$166.03; a 2.51% increase in just 24 hours. The volatility in CAT’s stock price is quite evident and may be risky to many investors. But is it a risk worth taking?

It is always risky buying stocks that are trading high. The market can be unpredictable and unforgiving but this is where knowing what type of investor you are, comes in handy.

Know your risk-reward ratio i.e  risk tolerance.

On the one hand, investors who are not confident in the positive performance of CAT in the future, now is a great time to sell. The current fair value for CAT is at US$101, with a current price of US$166.01; therefore you’ve made the capital gain.

On the other hand, for optimistic investors, CAT is a stock worth holding and buying more. With its top-tier management, loyal customers and the demand for its products and services, we expect CAT to perform above estimates in 2018.

What do you think?

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On the US stock market the S&P 500 scored 19% gains in 2017, only to be outdone by the Nasdaq and Dow Jones Industrial Average in 2018 so far.

So who is the rockstar?
The tech industry!

Stock like:
Google [NYSE: GOOGL] Apple [NYSE: APPL] Facebook [NYSE: FB]
Tencent [OTC: TCEHY] …to name a few.

US stock markets are still in a relatively sweet spot. Let’s face facts here; the earnings-driven 2017 market was the best year for earnings growth since 2011.

The S&P 500 trades at 20 times the next 12 months earnings. Overvalued?
Not really.

It is safe to assume that if conditions of liquidity within the economy do tighten, multiples will move lower, but not all that much before support shows up, should earnings still grow.

All 45 nations tracked by the OECD are expected to see their domestic economies grow in 2018.

Will that hope become a reality? 

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If you want to start investing with SSL but don’t have the time to monitor the market or to conduct the trades yourself then you can choose one of SSL’s managed Financial Planning products. We offer a variety of products for every type of investor and if you are interested in managing online trades yourself and having complete control over your investment portfolio then you can try SSL’s Brokerage account.

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