From left are Stephen Facey, Pan Jam; Robert Levy, Jamaica Broilers and Stephen Thwaites, Dyoll. These company heads have steered their firms into promising positions for 2005.
AS THE year draws to a close, investors are curious about the best investment prospects for the upcoming year.
With the largest portion of the equities market being appropriately priced at the present time the best options for the new year appear to be those stocks that offer the most optimal combination of high growth prospects and attractive dividends. In this regard, investors may want to take note of a few of these stocks, which are currently available at bargain prices.
BUY NOW AND AVOID THE RUSH
Pan Jam is uniquely positioned to realise increased profitability in 2005, given the strategic alliance formed between First Life and Life of Jamaica (LoJ). First Life, PJAM's 73 per cent subsidiary, is projected to reap significant benefits from LoJ; LoJ being the largest and most profitable insurance provider in Jamaica. At the same time, PCFS and H&L are forecast to register excellent returns through the synergies created by their respective mergers. Given these prospects for profit expansion, the group will boast an enhanced ability to pay dividends on a regular basis. Despite the strong underlying fundamentals, PJAM remains relatively undervalued when compared with its peers. This situation is likely to be temporary as upward market correction appears imminent for the new year. Buy now and avoid the rush next year.
EXPECTED TO OUTPERFORM THE MARKET
Jamaica Broilers Group (JBG) is likely to register its best performance on record in 2005, given the opportunities created by management's emphasis on value-added production, aquaculture and efficiency saving initiatives. JBG enjoys market leadership in the local poultry industry and will be looking to reinforce this position through diversification into highly lucrative value-added production. The two contracts to supply tilapia overseas also bode well for the company since fish commands twice the value per kilo of chicken. Further, JBG is expected to benefit from the efficiency saving technologies recently introduced.
However, JBG is particularly vulnerable to adverse weather conditions and volatile international grains prices. Notwithstanding these inherent risks, JBG trades at a significantly discounted P/E when benchmarked against peers. The company is high on the list of stocks expected to outperform the market in the upcoming year.
A TRICKY SITUATION
Dyoll Group is one to watch as the stock currently trades at approximately half the P/E ratio of its peer group. This phenomenon is largely explained by investors' fears surrounding the size of the damage caused by Hurricane Ivan as well as the lack of consistent profitability realised by the company. However, the turnaround registered since the start of the year must be instructive, especially when juxtaposed against last year when Dyoll reaped fortunes from the currency instability.
The year has seen significant recovery in core operation and expectations are for a continuation over the coming year, given plans to reinsure its motor vehicle business and contain costs. Dyoll also commands a vast amount of cash that it will use to amplify interest and dividend income. The main inhibitor is the price tag of Hurricane Ivan, beyond which, Dyoll should be strongly considered.
For further information on these and other stocks, please contact DB&G's Stockbrokerage department at 1-888-CALL DBG.
