Two of THE ANALYSTS from Taking Stock have said manufacturing and distribution stocks are the ones to watch in 2021, especially with COVID-19 still creating uncertainties for the global economy.

Their analysis comes against the background of the 2020 performance of companies like Seprod which grew 30% year over year (YOY).

Orick’s picks

Senior Wealth Advisor at Ideal Portfolio Services, Orick Angus, said Seprod was among his top 4 stocks of 2020 based on the consistent performance recorded each quarter despite the challenges of the health crisis. Rounding out his favourite stocks for last year were Grace Kennedy which went down 12% YOY, Mailpac up 28% and Indies Pharmaceutical down 22%.

“We presumed that people would be buying the products that these companies offer [during the pandemic] so the revenues would fall in line in regards to our expectations of how they should be performing verus companies that were severely impacted by COVID-19,” said Angus.

He added that he expects the same companies to pull ahead this year with the current climate not expected to change soon. He said he doesn’t anticipate a further fall off in the market, especially with the Jamaica Stock Exchange already at the bottom of the global exchanges list, down 22% in 2020.

He’s expecting a turnaround for financial companies in 2021, which should in turn, bring back some confidence in the overall stock market.

“I don’t expect any significant improvement throughout 2021. It will take time for companies to adjust based on the current climate…This year I hope the [financial companies] will regain some normalcy with their operations and maybe get back to what people expect them to do in terms of paying out the dividends,” he said.

Jodian’s picks

But for Research and Strategy Analyst at Sagicor Investments, Jodian Aris, the return of dividends may be later than projected, as the Central Bank may have to hold on to the funds to buffer their reserves.

Still, she agreed there is greater optimism for the stock market in 2021, with advancements from COVID-19 vaccines providing even greater hope for a faster return to normalcy.

“It’s going to be a better year but we still have to tread cautiously. It’s likely to be another whirlwind year but we have the 2020 experience,” said Aris.

Aris said she was impressed how companies like Caribbean Flavours and Fragrances (CFF) and Caribbean Cream were able to pivot and re-energize their operations last year to withstand the shocks of the pandemic.

She said stocks like Seprod also surpassed her own expectations.

“I’ve always been a fan of Seprod and I didn’t see it doing as well as it did in 2020 but being in the space that it is in, it would have been able to survive the effects of the pandemic,” she said.

 “The top stocks we’re looking at for this year are those in the manufacturing and distribution areas,” she added.

For 2020, Pulse Investments came out on top as the biggest gain with its stock going up 222%

Palace Amusement, which was among those hardest hit in the entertainment industry, was the biggest loser of 2020. It closed last year at $1299.99, down 55%. 

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