Financial Analyst John Jackson says Junior Market companies will be the ones to watch in 2023. 

Speaking on Taking Stock with Kalilah Reynolds, Jackson said in particular, he expects companies in the tourism industry and those that service the sector to do very well. 

These include companies such as CPJ Market, Dolphin Cove and Express Catering.

“Jamaica Broilers has also spoken about benefiting from increased sales to the tourism trade and that should get even better now that the industry is back to normal,” he added.

According to Jackson, the recovery of Jamaica’s economy along with a boom in the tourism industry will benefit those companies.

The Junior Market outperformed the Main Market of the JSE in 2022, up 16% compared to the Main Market’s 10% decline. 

According to Jackson, this performance is expected as junior market companies are more likely to grow faster than main market ones, and the progress is reflected in the stock price.

He said he expects the trend to continue into the New Year due to a combination of factors.

“For one I think Junior Market stocks have not yet fully discounted some of the profits of the companies. Also, tourism is going to be fabulous for this year compared to 2019 and certainly compared to last year,” he said.

Past the worst?

The icinsider.com CEO added that he believes Jamaica is past the worst in terms of rising interest rates and high inflation. 

“I think the worst is behind us and interest rates peaked from April last year using the treasury bill rates not the overnight rate… I believe interest rates are going down and inflation has been coming down,” he said. 

Jackson added that Jamaica will likely see deflation between now and April. 

“I also would not be surprised if the price of oil came down and other commodities came down. Shipping rates as well as all those things will feed into lower costs for businesses,” he explained.

Tourism surge expected

Jackson said that the flow of foreign exchange will be very buoyant in the first four months of the year because of the expected tourism surge. 

“Consider this – tourism numbers were down 22% last year compared to 2019 and remittances are up about a billion dollars over 2019. Remittances are likely to remain around those levels, so when the tourism trade comes back, it means that we [will] have roughly a billion dollars more of foreign exchange inflows that we didn’t have in 2019,” he explained.

Additionally, he said that the reopening of the Jamalco Alumina Plant will boost Jamaica’s economy.

Jackson said that these factors will create a significant increase in value and profitability for many companies.  

“I think it’s going to be an exceptionally good year for junior market stocks, barring any negative developments,” he said. 

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