Dennise Williams, Staff Reporter
JACKSON
"SALE ON now! Share prices rolled back to 2003 levels. Get as much as 50 per cent off while stocks last." This was the opening salvo by financial analyst John Jackson's presentation at The Ruins in Ocho Rios on Tuesday.
Essentially, Mr. Jackson a veteran analyst, and investment advisor says that stocks are on sale and quality stocks are looking very cheap.
"My favourite stock Lascelles de Mercado went as high as $375 per share last year. Now it trades at $190. Bank of Nova Scotia, a rock solid company traded at the equivalent of $30 per share last year, today you can pick it up for $20."
Mr. Jackson informed the audience that the time to buy is now because the mistake that investors tend to make is to jump on the bandwagon when the stock market becomes hot. He held a seminar last month where he gave participants his projections.
"I wondered why so many investors have shied away from Mayberry Investments now when the stock is trading at $2.51 per share. Last year investors were killing up themselves to buy the stock at $8 and $7 per share. Nothing about the company has changed and when the stock market comes back, so will Mayberry because they are so heavily invested in the Jamaica Stock Exchange (JSE). There is a strong case to make for stock market investing now."
That said, Mr. Jackson presented his top 20 stocks that based on his calculation should experience at least 100 per cent growth by the next 12 months. His top choices were Jamaica Livestock Association, Dehring, Bunting & Golding, Mayberry Investments, Hardware & Lumber, Jamaica Producers Group, Guardian Holdings Limited, Gleaner, First Jamaica Investments, Pan Jamaican Investments and National Commercial Bank.
PRICE INCREASES
Mr. Jackson explained why he picked the stocks. "In 2004 and 2005 hurricanes and bad weather caused the companies to experience price increases that could not be passed on. But, depending on the profitability of these companies, my expectation is that stock prices will go up.
Of course, Mr. Jackson reminded the audience "stock market investing is not for the weak hearted. That is why many people believe that they can't go wrong by investing in U.S. dollars. In fact, over the 1995 to 2005 period, the JSE has provided vastly superior returns of the U.S. dollar."
Mr. Jackson then addressed the big concern that many investors have the impact of upcoming elections.
"People are afraid that the market will not deliver what is expected because an election is on hand. However, the pre-election period is usually a very good one for the stock market because Government oils the machine. The 'run wid it' strategy takes place. Of course, the market is affected by other factors in the economy such as inflation and interest rates, but the effect of an election isn't necessarily a bad one."
He then presented the historical data of elections effect on the stock market index.
YEAR - MOVEMENT IN STOCK MARKET INDEX
1971 - Up 7 per cent
1975 - Down 6 per cent
1979 - Up 29 per cent
1988 - Down 5 per cent
1993 - Down 49 per cent
1997 - Up 19 per cent
2002 - Up 41 per cent
That said, Mr. Jackson expects 2006 to be a very good year. "We will possibly see further declines in the stock market index before the market levels off. I see a levelling off of the market in a week or two."
Additionally, Mr. Jackson supplied statistics to support his claim. "The stars are lining up for a positive year. You tend not to have two back-to-back years of decline in the stock market. In fact, we have never had more than one year of consecutive declines other than the 1975 - 1979 period. And so since 2005 was bearish, I see 2006 turning around."
