What Is Opportunity Costs and Why You Should Pay Attention

Posted on

When a person uses money to make a purchase, they often believe that the only thing they are giving up is the money itself, but this is only the half, or even the quarter of what they really lose. Many individuals are unable to identify the opportunity costs when weighing the benefits and against the costs of a payment for a good or service. Take for instance an individual makes the decision to go to the movies. They might think the only cost to them is the movie ticket and possibly something from the concession stand, however, what they don’t realize is that they forego the time they are spending watching the movie, when that time could have been used to do something else that might bring more benefit than the movie, at a lower cost. Investopedia defines opportunity cost as the benefit that a person could have received, but gave up, to take another course of action. In layman terms, an opportunity cost represents an alternative given up when a decision is made.

This can be applied to the principles of investing. The volatility of both the local and international stock markets have sparked uncertainty in many tend to stash their savings to make the best possible gain. Conservative individuals may opt to take the safe route by depositing their money in savings accounts and earn measly percentages every quarter or year, more aggressive ones will take on the stock and bond markets to wager their wealth and stand to earn significantly more returns, with far greater risks. So, who has the upper hand? For everyday that passes with money sitting in a savings account, a conservative investor loses the opportunity to put their cash in low risk bonds and generate returns higher than what a commercial bank is offering. At the other end of the spectrum, everyday spent not being proactive or aggressive about investments, is another lost opportunity in making more gains than a more a conservative, or even a moderate investor.

With more private companies edging their way into the public sphere, I urge those who aren’t knowledgeable about stock markets to take the time out to learn about the wealth they can gain by investing in equities and bonds, rather than leaving money lazy in a savings account. There are risks involved in the safest instruments, but the gains far outweigh the possibility of losses, as well as the opportunity costs.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Seprod Set to Strike Big with its Largest Shareholder

Posted on

Seprod Limited [JSE:SEP] has announced that it has arrived at an agreement with its largest owner Facey Group Limited, to acquire its consumer business Facey Consumer at an undisclosed sum,  consisting of only Facey’s consumer brands such as Eve and Delight and pharmaceutical products.

Facey is a leading value-added distribution group with operations in the Caribbean, Central America, Europe and the Pacific. Today, Facey is one of the largest private companies domiciled in the Caribbean.

With this acquisition Seprod will be gaining warehousing space and real estate at 53 and 61 Newport Boulevard at Newport West, Kingston. Moreover, the most important part of this acquisition is the leveraging of company’s brand through a larger distribution network.

As was stated leveraging and strengthening the manufacturing company’s distribution platform is its main priority. CEO and Managing Director Richard Pandohie of Seprod, stated “the acquisition of Facey’s consumer business will allow Seprod to take its distribution capabilities to the next level by giving us control of an established, first-class distribution network which is needed to support the continued expansion of our businesses and expand our portfolio of market-leading brands.”

Whereas Seprod’s Board unanimously approved the acquisition of Facey Consumer, it still has some fine details to iron out, such as a definitive legal document and approval from its other shareholders which is scheduled for April 9, according to the Financial Gleaner. Furthermore, Pandohie is of an optimistic view that all will go well and by late June early September of this year this new acquisition will be up and running.

Seprod Limited, together with its subsidiaries, operates through two segments, Manufacturing and Distribution in Jamaica. The company’s products primarily include beverages, cleaning products, dairy products, industrial products, personal care products, produce and distributes consumer goods. The company offers its products primarily under brands such as Miracle, Serge, ButterKist, Pronto, Swizzle, Lider, Monster, Betty and Supligen to name a few. Seprod Limited was incorporated in 1940 and became a public company and was listed on the Jamaican Stock Exchange in 1985.

Currently Seprod Limited is trading at a price of $33.50 and we here at SSL recommend a ‘BUY’ for the manufacturing company, as it has considerable activities in its pipeline.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

First #DeleteFacebook; Now #DeleteNetflix

Posted on

While we continue to monitor the controversy surrounding Facebook [NYSE: FB], news has now surfaced of another company facing similar issues which may affect its stock value in the coming weeks. Netflix [NYSE: NFLX] is the latest victim of a boycott from Brazilians, an international market which provides the company with a vast number of subscribers.

There is now an active #DeleteNetflix campaign on Twitter, protesting the original Netflix series ‘The Mechanism’ which was aired last Friday. The Mechanism is a fictional show based on a true story of a corruption investigation in 2014, most popularly known as ‘Car Wash.’ It involved business leaders, multinational corporations and not surprisingly, politicians. The investigation was initially targeted towards black market dealers who used small businesses such as gas stations and car washes for money laundering purposes. In other words to wash illegal money. Over 150 persons have already been arrested in the probe, prosecuted or were brought before the courts. This made ‘Car Wash’ one of the most talked about and most complex corruption scandal of all time in South America.

Impeached former President of Brazil, Dilma Rousseff, described the show as ‘underhanded and full of lies.’ While movie critic Pablo Villaca also chimed in on the issue referring to the series as ‘irresponsible.’ He cancelled his subscription to Netflix after been a loyal customer for six years and further encourages others to follow suit. Villaca lamented that the producer of the series is ‘a creator of fake news’ and equated the series to a ‘movie where Winston Churchill makes a deal with Adolf Hitler to attack the United States.’

Now wouldn’t that be a complete fallacy?

The series director, Jose Padilha, subsequently responded saying, ‘critics are too focused on the details and missing the bigger picture.’ However, since we all know Padilha is a native of Brazil he shouldn’t be surprised that the series has gotten this type of attention and criticism from Brazilians. While standing firm on his position that the series is non-ideological, Padilha may have contradicted himself as he further stated, ‘We can’t blame the messenger.’ He seems to think Brazilians are overreacting and he has no plans of cancelling the series. Padilha hopes to air as much seasons as possible until corruption ends in Brazil; which may very well be a long time.

While Netflix is yet to officially respond to the uproar, the company recently posted a video on its Twitter page with a video of an advertisement which reads, ‘corruption store.’ Additionally, the ad depicted items such as ankle monitors and pocket underwears to facilitate store bribes.

We anxiously await Netflix’s response to this development as well as the impact on viewership and subscription. This is definitely one to watch.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Tencent and Naspers Ltd – A Giant Venture Capital Payoff

Posted on

Naspers Ltd, the Cape Town-based company, is selling $10.6 billion of shares in Tencent Holdings Ltd., equal to 2 percent of the stock in the Chinese operator of the WeChat messaging service, in one of the greatest venture-capital investments ever. The stake Naspers bought for just $32 million in 2001, when Tencent was an obscure website in a nation where few people used the internet, is now worth $175 billion.

Asia’s most valuable company warned it would sacrifice short-term margins, spending on content and technology in pursuit of growth.

We continue to believe that Tencent is positioned to be one of the very best growth enterprises in any industry in the world. This firm saw EPS growth of 30.9 percent last year, with the current growth estimate for this year calls for earnings-per-share growth of 39.6 percent. Furthermore, the long-term growth rate is currently an impressive 27.2 percent, suggesting pretty good prospects for the long haul.

And if this wasn’t enough, the stock has seen estimates rise over the past month for the current fiscal year by about 1.9 percent. Thanks to this rise in earnings estimates, Tencent remains a strong buy which further underscores the potential for out-performance in this company.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Is There a Trade War Brewing Between China & the U.S.?

Posted on

Tension between the two biggest trade partners has intensified, as China announced its first of many retaliation against metals levies hours after President Donald Trump outlined new tariffs on $50 billion of Chinese imports.

China was not pleased and divulged a $3 billion tariffs on U.S. imports. U.S. stock futures dropped, signalling a further retreat for the S&P 500 Index after falling 2.5 percent. This escalation does not inspire confidence in the global scheme of trading especially in the case of  economic growth.

Suppliers to Apple Inc. were among the hardest hit in Hong Kong and mainland markets on Friday, as investors focused on potential losers from the trade spat.

Our analysts agree that China’s response is surprisingly modest in light of the U.S. actions, suggesting there could be a good deal more to come. And lest we forget that China is the largest foreign owner of U.S. Treasuries, therefore China has considerably more leverage over the U.S. some things President Trump is choosing to ignore.

China reportedly is set to pursue legal action against the U.S. at the World Trade Organization in response to planned tariffs on steel and aluminium imports. If China and the U.S. can’t reach an agreement on steel and aluminium trade following a public consultation period ending March 31, Beijing could begin collecting tariffs of 15 percent on imports worth $977 million, including fresh fruit, nuts, wines, denatured alcohol, ginseng, and seamless steel tubes. After evaluation, China could then implement tariffs of 25 percent on around $2 billion worth of product imports, including pork and aluminium.

We are concerned that a trading war could undermine the broadest global recovery in years. Meanwhile, business groups representing companies ranging from Walmart Inc. to Amazon.com Inc. are warning U.S. tariffs could raise prices for consumers and sideswipe stock prices.

We will be monitoring this one closely.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Why is Facebook’s Stock Decreasing in Value?

Posted on

The controversy surrounding data mining firm, Cambridge Analytica has been reflected in Facebook’s stock value. Cambridge Analytica has been accused of stealing personal information through Facebook from approximately 50 million users. The information collected was said to be used to win the 2016 Presidential Election in favour of the Trump Administration, a client of Cambridge Analytics .

They extracted data from millions of Facebook profiles by creating personalized models based on people’s profiles, then promoting Trump through advertisements that would be appealing to users. Cambridge Analytica is now under criminal investigation as their actions are said to be illegal. Facebook allegedly knew about a breach in security and went ahead in suspending Cambridge Analytica from advertising on their platform.

After news broke about the infringement on Friday, Facebook’s stock price declined by 4.5 percent at the end of the trading day. As word spread further, two major new outlets posted details about the connection between the data firm and Facebook, the stock price continued to plummet, falling by 6.8 percent on Monday (the most it has ever declined since 2014) and then opening 5 percent below on Monday.

Due to these reports, Facebook is now being investigated by the Federal Trading Commission and Cambridge Analytica is being investigated by The U.K. Information Commissioner’s Office. As a result of this and information still being made public factors uncertainty and anxiety among current shareholders are on the rise. Facebook’s stock had experienced a decent start to 2018, with shares rising by about 4.9 percent, but the stock has since underperformed the broader Technology Select Sector SPDR ETF.

Based on an analysis of the stock’s charts, signs are showing that Facebook could be headed 10 percent lower, with the potential to fall by as much as 20 percent. Regardless, we encourage investors to hold their shares, and view this fall as a buying opportunity while keeping abreast of the changes in its case with Cambridge Analytica.

We are bullish on tech companies because history has shown that they have the ability to bounce back following adversity. Buying more shares in Facebook now can possibly prove fruitful in the near future.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Rihanna vs Snapchat

Posted on

Snapchat Inc. (NYSE: SNAP) has been taking a lot of hits recently, from Kylie Jenner $1.3 billion “does anyone else not open Snapchat anymore?” comments to “Would you rather” game featuring Rihanna and Chris Brown.

The ad, which was created by a third party cost Snapchat $800 million as well as a 4% plunge in stock price. Since its IPO Snapchat has been one of those lacklustre performing company that should only be used a trading play rather than be considered an investment option.

Let’s not kid ourselves, Snapchat is not the new Facebook (NYSE: FB) or Instagram, of which both of these social networks have already added Snapchat’s most notable features into their platform while maintaining their domination of market share.

Rihanna who has over 61 million followers, responded to the offensive ad – would you rather “slap Rihanna” or “punch Chris Brown”, “You spent money to animate something that would intentionally bring shame to DV victims and made a joke of it!!!” she posted on her Instagram story.

Following the post, Snapchat apologised for the ad that referred to the Rihanna assault by then-boyfriend Chris Brown in 2009. But is the damage done?

If there is any confusion about how powerful market sentiment is, consider this exhibit A.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Is Inflation a Necessary Evil?

Posted on

You hear the term, you probably listened to some financial guru speak about it, you researched the term, so you have a basic understanding. But how does inflation affect you?

Inflation refers to a situation in which you find that it takes more units of currency to buy goods and services than it took you yesterday or last year to buy the same products and services.

What are the specific effects of inflation?  

Why should you be concerned about its spectre haunting the economy?

Inflation Begins with Money Losing Value

To understand the effects of inflation consider this; a J$100 bill in 2000 cannot buy the same things today. A patty cost J$30 or J$40, but now the same patty cost J$150.

The same situation applies to bread, gas or everything you use on a regular basis. The significant effect of inflation is that a nation’s nominal currency loses value – it takes more Dollars, or Pounds Sterling, or Swiss Francs, to buy the same quantity of goods.

The obvious effect of this is that inflation makes it more difficult for people to afford the necessities of life if their labour is not able to keep pace with the inflation rate. This results in families struggling to keep up with the price of everything from cornflakes to college tuition.

Inflation Transfers Money From Savers and Investors to Debtors

Moving beyond the underlying effects of inflation, you come to realise there are two other significant effects of inflation.

The effect of inflation on savers and investors is that they lose purchasing power.  Whether you’ve buried your money in a coffee can in the backyard or it’s sitting in the safest bank in the world, it is becoming less valuable with the passage of time.  This can create an incentive to spend money or, under the wrong conditions, a disincentive to invest money in things that would otherwise be good for civilisation in the long-run.

The effect of inflation on debtors is positive because debtors can pay their debts with money that is less valuable. If you owed $100,000 at 5 percent interest, but inflation suddenly spiked to 20 percent per year, you are effectively watching 15 percent of your debt get paid off each year, entirely free of cost.  At some point, you’d be able to get a minimum wage job for $100 per hour and obliterate your debt.

Put more bluntly, the net effect of inflation is that it serves to transfer money from savers and investors to debtors.  It punishes those who postponed their enjoyment and invested in building roads, schools, factories, and businesses and gives their reward to those who are in debt.  It is a severe moral injustice, mostly caused by governments printing money — or, these days, making electronic entries — to cover expenses that cannot be paid out of the general treasury revenue.

Think about it.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.


Share it with a friend:

Tencent Holdings Limited A Screaming Buy!

Posted on

Now valued at $500 billion, Tencent Holdings Limited has become Asia’s first technology company to reach such remarkable value. The Chinese tech giant also boasts the title of being the fifth largest internet company in the world. Since the release of their IPO in 2004, Tencent’s stock price has increased astronomically by 11,000 percent. Therefore it did not come as a surprise when the company recorded a 115 percent increase in its stock price in 2017. Earnings per share grew 65 percent, and revenue is estimated to be $10 billion. Tencent Holdings Limited plans to release its financial statement for 2017 on March 21, 2018, and we are excited to see its performance.

Tencent Holdings Limited is an extraordinary company which, over the years, has expanded into payment services, property, advertising, e-commerce and gaming. Tencent’s WeChat has taken the company to another level. It is described as the heart of Tencent Holdings. Similar to apps of the western such as Facebook, Snapchat and Instagram, in the East (China), the social media add that dominates is WeChat.

WeChat while it has its similarities to the others, it has its differences. WeChat allows users to send money across China. The service is called WeChat Pay. It is used by 800 million Chinese. It is similar to Visa or MasterCard as persons can use it to purchase goods. WeChat is a cashless system utilized by even street vendors. How incredible is that?

Tencent Holding’s most popular game, Honour of Kings, now has 200 million monthly players. In 2016, the company purchased the majority stake in Clash of Clan’s Supercell and recently partnered with Nintendo. For a company that has not yet fully explored the western gaming market, but is considered the largest and most valuable gaming company in the world, the possibilities are endless for Tencent Holding.

We recommended TCEHY when the company was trading at US$23.17, now currently trading at US$ 59.73, a 157.79 percent gain in just one year!

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Supreme Ventures Gaming in Guyana

Posted on

Supreme Ventures Limited (SVL) recently reported that the company has signed an agreement to open up gaming operations in Guyana. The agreement was signed with Guyana’s Gaming Authority, which could see SVL infiltrating the gaming industry in Guyana dominated by hotel franchise, Princess Hotel and Casino.

Details of the agreement have are still forthcoming, however, it is clear that SVL intends on expanding its reach across the region and with this move there is a greater opportunity for the company to increase revenue and net profit in the coming months.

The local gaming industry, as stated by the Betting, Gaming and Lotteries Commission, amassed revenue of $135.6 billion between 2015 and 2016. Of that amount, video lottery terminal accounts for $16.7 billion, a 22 percent increase from previous years, while 19 and under gaming operations made revenue of $1.4 billion. A significant portion of that total was contributed by lottery games, which accounts for nearly one- third of the gaming industry.

Additionally, lottery gaming made revenue of $34.1 billion and the betting sector accounted for $317.3 million in 2016. Supreme Ventures Limited made revenue of $45 billion in 2016, a 2 percent increase from 2015.

Guyana currently has gaming products including different scratch and win games, Draw d Line, Lotto Supa 6, Lucky 3 and Daily Millions.

We do recommend that our clients purchase this stock and with news of an expansion, we look forward to see the performance of the company for 2018.

Share it with a friend:

Billion Dollar Tax Cushion For Flow

Posted on

Cable and Wireless Jamaica Limited, most commonly known as FLOW, recently announced that they have accumulated a tax cushion of $44.8 billion, as a result of tax losses the company incurred over a number of years. FLOW has been operating at a loss for years due to a debt of $60 million owed to parent company Cable and Wireless Communications and a consistent reduction in the value of assets, among other reasons.

Despite all this bad news, something positive came about. Based on the tax losses of $44.8 billion, the company is able to offset against any future profit, once the Tax Commissioner and the Tax Administration of Jamaica decides how it should be used.

Furthermore to the tax loss announcement, FLOW released its 2017 financial report. In 2017, they made an operating profit of $5.02 billion, however, it had to pay $5 billion owed to CWC Entities for debt financing charges. While a net loss of $383 million made the $261 million profit the company made in 2016 insignificant, FLOW managed to increase its revenue by 8 percent to $27 billion compared to $25 billion in 2016.

Additionally, with thousands of new customers under its belt, FLOW announced an 11 percent revenue growth for broadband services and 18 percent for mobile services.

Unfortunately, the 2017 financial report can be the last publicly released by FLOW, if the stock is delisted due to acquisition of majority of shares by CWC Cala Holdings. In the meantime, trading of CWJ stock on the JSE has been suspended until March 22, 2018 and will resume trading on March 23, 2018.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Amazon is On A Roll

Posted on

The latest Amazon venture in its quest to infiltrate every industry, has recently delved further into the world of Fintech. There has been reports of Amazon currently in talks with banks such as Capital One and JP Morgan Chase about implementing hybrid checking accounts for its customers. If this comes to fruition then many persons, especially millennials without bank accounts, will be the main target.

Many may ask; will Amazon open a bank? Well, the answer to that is no. They will be in partnership with a bank on a product to benefit its customers while also benefiting the company. This move would see the company benefitting from not having to pay high fees to financial firms and allow the company to better understand the spending habits of its customers.

This may be a great move as more and more Gen Xers and millennials are tech savvy than ever showing a preference to flexible options and lower fees. Investors should note that this is not Amazon’s first time trying to enter into the financial services. Last year they launched Amazon Cash, a service similar to PayPal where customers could add funds to their account in order to buy for goods online. Amazon cash offers a Prime Reload Visa card from JP Morgan Chase. Additionally, Amazon Pay, another financial service offering from Amazon, allows customers to shop and pay for goods on other sites without re entering their credit card information.

Amazon is still in the early planning stages and there is skepticism from analysts as to the likelihood of this idea coming to fruition. Nonetheless, there is no denying that with Amazon anything is possible.

We are waiting to see how the company perfects this idea and the results of the discussions with banks. If you still have not purchased Amazon, now may be a great time to do so.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

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.

Follow us on Facebook, LinkedIn and Twitter please leave us a review.

Share it with a friend:

Investing Mistakes New Investors Should Avoid

Posted on

Investors work against their own best interest by making foolish, emotion-driven mistakes.  It is this lack of rationality, combined with an inability to stick with a valuation-based or systematic-based approach to equity acquisition.

All of this while paying little attention to marketing timing, which explains the research from studies put out by Morningstar and others that show investor returns are often far worse than the returns on the stocks those same investors own.

In fact, in one study, at a time when stocks returned 9 percent, the typical investor only earned 3 percent. Take into consideration all of the risks of owning stocks and enjoying a fraction of the reward being too busy trying to profit from a quick flip rather than seeking foreign cash-generating enterprises that might enrich your portfolio for the medium to long term.

We will address five of the most common investing mistakes inexperienced investors make. Though the list certainly isn’t comprehensive, it should give you a good starting point in avoiding moves that may come back to haunt you:

Paying Too Much for an Asset in Relation to Its Cash Flows

Any investment you buy is ultimately worth no more, and no less, than the present value of the discounted cash flows it will produce.

If you pay a higher price, you earn a lower return. If you pay a lower price, you earn a higher return.

The solution is to use the P/E ratio.Know how to compare the earnings yield of a stock to the long-term. This is basic stuff that is covered in beginner’s finance. If you’re unable to do it, you are one of the people who have no business owning individual stocks.

Incurring Fees and Expenses That Are Too High

Whether you are investing in stocks or a bonds costs matter. You have to know which costs are reasonable and which costs are not worth the expense. It can be tricky, but the consequences are too high to waive it away.

Ignoring Inflation

Focus on your purchasing power. Imagine you buy $100,000 worth of 30-year bonds that yield 4 percent after taxes. You reinvest your interest income into more bonds, also achieving a 4 percent return. During that time, inflation runs 4 percent.

At the end of the 3 decades, it doesn’t matter that you now have $311,865. It will still buy you the same amount you could have bought three decades earlier with $100,000. In short, your investments were a failure. You went 30 years without enjoying your money, and you received nothing in return.

Choosing a Cheap Bargain Over a Great Business

Warren Buffett warns against this in more shareholders letters than we care to count. If history is any indication, investors, are likely to have a much better chance at amassing substantial wealth by owning an excellent business that enjoys rich returns on capital and strong competitive positions, provided your stake was acquired at a reasonable price. This is especially true when compared with the opposite approach — acquiring cheap, terrible businesses that struggle with low returns on equity and low returns on assets.

Buying What You Don’t Understand

Many losses could have been avoided if investors followed one, simple rule: If you can’t explain how the asset you own makes money, in two or three sentences, and in a way easy enough for a kindergartner to understand the basic mechanics, walk away from the position. This concept is called Invest in What You Know. You should almost never — and some would say, absolutely never — deviate from it.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

CPJ to Undergo Multi-Million Dollar Upgrade

Posted on

Caribbean Producers Jamaica CPJ [JSE: CPJ] has announced that it will spend an additional USD $500,000 this year and going into 2019 for further upgrade of its plant, after upgrading its manufacturing line at the cost of USD $350,000 according to Chief Executive Officer, David Lowe.

Currently, CPJ operates on 125,000 square feet and plans to expand its warehouse space by 60,000 square feet as it aims to meet increased demand while improving efficiency. The company aims in the expansion of its new seven-acre complex, to upgrade their distribution operation and cold storage capacity.

Lowe stated “we are investing in upgrading our warehouse management system to accommodate the management and rotation of our large and diverse portfolio of frozen, dry and chilled food categories – totalling over 4000 Stock Keeping Units (SKU).”

Caribbean Producers Jamaica Ltd. (CPJ) was established by Mark Hart and Thomas Tyler in 1994 in Montego Freeport, St. James. The company was listed on the Jamaica Junior Stock Exchange (JSE) on July 20th, 2011. Caribbean Producers Jamaica Ltd. is one of Jamaica’s leading food service retailers, manufacturers and distributors in the retail and hospitality sector. The company offer a wide array of international and locally manufactured products including wines, spirits, beverages, groceries, meats and select seafood. CPJ also exclusively distributes Lifespan water, which has been gaining significant market share.

Currently, CPJ is Trading at $4.62, and Stocks and Securities Limited recommends a hold on this stock, as CPJ is on a growth and expansion stage.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Honey Bun 1982 Limited Expanding Production

Posted on

Having allocated additional space for inventory, Honey Bun Limited will add a fourth production line to its operations. Honey Bun hopes that this investment will increase revenue and profits for 2018. The expansion is not only limited to factory space but extends to the innovation of new products. The company recently developed new flavours for the Goldie cream-filled cake it is most famously known for. The new flavours include strawberry and black forest. Increasing the total flavours for Goldie to four, alongside vanilla and chocolate.

Additionally, Honey Bun will be making other products soon to hit the market such as shorty hamburger buns and cassava muffin. These new products will be showcased at Expo 2018 to be held next month.

The additional factory space was a necessity for the company in order to expand production. However, there is the need for more equipment as well. Honey Bun will purchase new equipment based on a production schedule they have devised in order to avoid debt financing. The company currently has three production lines and will be splitting one of the lines into two in order to create the fourth line once the equipment arrives by next week. Honey Bun is optimistic that they will max out the new space by the end of 2018 and should start a new expansion project by then.

In 2017, revenue for Honey Bun increased by 5 per cent from $1.19 billion to $1.25 billion in 2017. However, net profit decreased by 32.7 per cent from $139.5 million to $93.9 million in 2017. This decrease was attributed to the lack of space which hampered production and delayed the purchasing of more equipment.

Honey Bun Limited produces various pastries such as buns, cakes and breads and is currently trading on the Jamaica Stock Exchange at $4.48.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Lighting The Way With FosRich

Posted on

FosRich Company Ltd. (JSE: FOSRICH) released their audited financial statements for the financial year(FY) ended December 31, 2017.

The company’s first financial report post IPO sets a positive tone for 2018.

FOSRICH saw a sharp increase in its net profit of  JMD $54 million or 81 percent when compared to the previous financial year of JMD

$30 million; as a result of other income and gains in currency conversion.

FOSRICH also displayed excellent financial management having increased Return on Assets (ROA) by more than 50 percent in 2017 of 4.2 percent compared to 2.7 percent in the prior year.

Furthermore, the company expanded its Return on Equity of 9 percent when compared to FY 2016 of 7.6 percent. This is as a result of the marginal growth in the company’s total assets and decreases in total liabilities such as payables and current portion of long-term liabilities.

Moreover, FOSRICH increased its retained earnings by 48 percent giving them leverage to invest more in core business functions for further growth in the 2018 FY.

FOSRICH reported robust growth in its cash and cash equivalents in 2017 by 621.7 percent; an increase of JMD119.8 million when compared to financial year 2016 JMD-22.9 million. This notable increase was as a result of the growth in financing activities of 245.9 percent from listing on the JSE and also the decrease in cash used for investing activities of JMD-7.6 million compared to -10.5 million in FY 2016. Currently, FOSRICH is trading at 2.70 with a Price to Earnings (P/E) of 24.49x.

Overall FosRich Company Ltd. displays good financial health with good financial management, and while there are some potential risks such as currency risk, FosRich remains a strong buy recommendation.


If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.


Share it with a friend:

Conditions Ideal for Growth in the Market for 2018

Posted on

As the majority of persons would realise, especially as it relates to currency, the Jamaican dollar has been strengthening to the United States Dollar moving from JMD $130.00 to USD $1.00, to JMD $127.68 to USD $1.00 just last week. The appreciation of  Jamaica’s currency merely shows that there is growth in the economy and that investing on the market would prove better than a savings account.

Many factors contribute to the strengthening of the economy. Some of these include:

  • Optimistic projected earnings
  • Falling interest rates
  • Increase in employment
  • Tourist sector growth

With positive projected earnings and falling interest rates, a company’s stock price can surge, bringing an overall gain of over 40 percent. Additionally, unemployment has decreased from more than 16.3 percent  in 2013 to a little over 10 percent  in 2017.

Newly reopened bauxite company, Alpart has resumed operations which allows for both increased employment and increased export which can result in growth in the overall economy. The more persons are employed, the more spending there will be, and hence the more taxes will be paid over to the government.

The market did very well in 2017, some stocks grew & rose by over 100 percent and for others between 50 and 81 percent. Therefore, this means that this year’s winners and last years may not necessarily be the same. Those booming companies on the main market in 2017 may find their growth rate slowing down when compared to newly listed companies.

We are expecting an active 2018 for all things IPO and have called it the ‘Year for  IPOs’ in the Jamaican market based on record listings on the JSE last December. It is evident that Jamaicans love their IPOs and we expect the trend to continue as there are 10 new companies so far expected to list this year.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Amazon Buys Smart Doorbell Company

Posted on

Amazon continues to spread its brand offerings to as many consumers as possible; this time the multi- billion dollar company is investing in the smart home technology market. Amazon has acquired smart doorbell company, Ring, for an estimated US$1 billion. In what seems to have become tradition among company acquisitions, Ring will remain an independent company following companies like Zappos, Twitch and Audible to maintain the Ring brand without altering company operations.

Ring makes doorbells that use Wifi and are equipped with cameras to make homeowners aware of who is at the door. The smart technology is connected to the owner’s smart devices through an app that provides the audio and video in order for owners to communicate to who is at the door. Ring’s mission is to reduce crime by creating technology based neighbourhood watch systems.

This is not the first attempt at landing high profile investments for Ring. James Siminoff, CEO and inventor for Ring, was a participant on the show Shark Tank in 2013. He was not successful in securing a deal from investors when he requested US$700,000 for a 10 per cent stake in the business, which was then called Doorbot.

Despite that setback, the company has made US$209 million; US$109 million from investments from entities like Qualcomm, Goldman Sachs, Richard Branson and Amazon. In the past they invested in Ring through its Alexa Fund, which helps other companies like Ring build skills and products for Amazon through voice innovation. Ring customers are able to interact with the smart doorbell through their Amazon Echo devices executing voice commands.

It seems the company is racing to compete with other companies in the smart home market such as Google and Nest. In December, Amazon also acquired Blink, which is another start up in the industry. Amazon is taking over; have you purchased the stock as yet?

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Local Market On the Rise

Posted on

The Jamaica Stock Exchange saw ten new companies listing on the Jamaican stock market in 2017, along with the doubling of stock prices for several listed companies. It appears that an increasing number of Jamaicans have been convinced of the potential gains from investing and have been flocking Initial Public Offerings. The JSE reported that 12,000 new accounts were opened on the Jamaica Central Securities Depository (JCSD) and pushed investor interest and demand for brokers to bring new issues to market in 2018.

What influenced this significant shift in local trading is the economy’s ability to provide a sustainable environment for businesses to improve efficiency and expand operations. Businesses are growing and the reduction in interest rates are encouraging investments since returns are now higher. Since the JSE was named the best performing stock exchange in the world in 2015, it has seen significant improvements in stock indices by 44 percent at the end of 2017 in overall stock appreciation.

Additionally, with the new positive projection of the 2017/2018 fiscal year, the economic conditions are set to improve further, making business environments even more conducive to growth. We can then anticipate more listings on the exchange and possible rise in stocks’ values. The Jamaica Stock Exchange, along with lead broker houses in the country, have made the process of transitioning from private to public company smoother for business owners.

Given the current track record that the JSE has for listing companies and aiding in the significant increase of stock value on the first day of trading, more and more companies are relying on the Exchange to assist in raising much needed capital for expanding their operations.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend:

Walmart Competing with Amazon

Posted on

Walmart Inc. [NYSE: WMT] categorised as the world’s largest retailer, forecasted not so great annual profit for this fiscal year.

This is attributable to decline in sales over that period.

According to Bloomberg, the company expects earnings per share of $4.75-$5.00 in comparison to Wall Street’s estimate of $5.13.

The continuous growth that Walmart has trended along is significant to the lifespan of the company and is important to maintaining its position in the industry.

Walmart Inc. has also gotten a push start from its acquisition of Jet.com in 2016, which allowed online access. However, one of its biggest competitors Amazon.com Inc. [NASDAQ: AMZN] has branched off into different sectors such as healthcare. Moving into a brand new sector for Amazon Inc. is a positive move that broadens their scope and diversification.

This poses a problem for Walmart. Market share of the grocery and apparel industry has been a source of worry following a decline in online sales, while Amazon’s sales grew by almost 40 percent.

Doug McMillon, CEO at Walmart is trying his hardest to switch consumers’ interest from shopping in the store to buying online where they tend spend more. Other benefits from increasing foot traffic inside stores could help to motivate staff members and have further ripple effects such as increased wages and enhanced parental-leave policies.

Despite the fact that the investments mentioned earlier are suitable for any company, it can also dampen profits, which has been shown in the projections of this fiscal year.

Following a number of federal tax changes that happened last year under the Trump Administration, an analysis is still being done by the company to assess the impact. However, they have estimated about a $207 million benefit for their last quarter and entire financial year.

Online sales grew at about 23 percent during the last period, in comparison to the 50 percent in the previous quarter, which is not particularly encouraging. However, it is believed that Jet.com and Walmart Inc. do well together.

With 2019 fiscal year approaching, the company sets positive outlooks and expect to expand their grocery business online. There also plans in the pipeline to upgrade their website which will focus more on fashion as well as home goods, and go into partnership with Lord & Taylor to sell some of their merchandise.

Walmart has already begun introducing new lines of apparel, which adds a brand new touch to their merchandising offerings.

Can Walmart maintain its position in the industry?

Will they keep up with Amazon?

We believe that the company has a strong brand and will continue to prove that to its stakeholders.

If you liked this article and want to read other great stories, try our Archives. Also if you are new to investing you can try our Investment Basics Blog.

Share it with a friend: