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Caribbean Stock Report: AML Foods continues strong performance on Caribbean Indices

For the week ended March 25 2011, 83,066,373 shares valued at$17, 763,257 crossed the floors of the six stock exchanges across CARICOM, with 18 stocks advancing, 25 declining and 78 remaining unchanged.

National Commercial Bank of Jamaica was the volume leader with 46,840,322 shares being traded; Demerara Bank Limited posted the largest gain of 25 percent for the week; while on the losing end, Pulse Investments fell 15.3 percent. For the week, ten of the Caribbean Select 30(CSX 30)stocks advanced, ten declined and ten were unchanged. The CSX 30 gained 2.15 points to close the week at 1,139.3, up 0.78 percent year to date.

The Junior market continued its recovery, with four of the CJSX stocks advancing, two declining and four remaining unchanged. The CJSX gained 2.17 points to close the week at 1,060.3, down 7.42 percent for the year.

Retail and Distribution and Banking stocks continued to perform well in 2011. For the week, four Caribbean Retail and Distribution Index(CRDX)stocks advanced, one declined and five were unchanged. AML Foods, Agostini’s Limited and St. Kitts&Nevis Trading posted gains of 9.17 percent, 5.64 percent and 4.12 percent respectively. As a result, the CRDX advanced 7.0 points to close the week at 1,116.3, up 1.57 percent year to date.

In the banking sector, three stocks advanced, two declined and seventeen were unchanged. Demerara Bank Limited led the group with a 25 percent gain, while Bank of The Bahamas gained 5.48 percent. The Caribbean Banking Index(CBSX)advanced 2.26 points to close the week at 1,147.5, up 3.14 percent year to date.

Performance was quite mixed in the manufacturing and Insurance and Investments sectors, while the Tourism and Real Estate group continued to be flat. In the manufacturing sector, five stocks advanced, six declined and nineteen were unchanged. Caribbean Cement Company and Kingston Wharves posted strong gains of 7.43 percent and 4.37 percent respectively. However, on the losing end, National Flour Mills, Banks DIH and Berger Paints Jamaica posted losses of 10 percent, 5.56 percent and 4.55 percent respectively. The Caribbean Manufacturing Index(CMSX)advanced 0.08 points to close the week at 1,106.4, down 3.04 percent year to date. In the Investments and Insurance sector, four stocks advanced, seven declined and six were unchanged. Eastern Caribbean Financial Holdings, National Enterprises Limited and Jamaica Money Market Brokers posted gains of 7.84 percent, 1.30 percent and 1.16 percent respectively. However, Pulse Investments recorded a 15.33 percent decline, Pan Caribbean Financial Services a 9.51 percent decline and First Jamaican Investments a 6.48 percent decline. The Caribbean Insurance and Investments Index(CIIX)advanced 0.04 points to close the week at 970.7, down 2.24 percent year to date.

For the week there was a broad based decline in Communications and Utilities and Conglomerate stocks. In the Communications and Utilities sector, four stocks declined and ten were unchanged. Gleaner, Cable and Wireless Jamaica, Radio Jamaica and Cable Bahamas all posted losses of 6.48 percent, 3.56 percent, 3.34 percent and 1.91 percent respectively. The CCUX declined 5.95 points to close the week at 1,156.6, up 8.34 percent year to date. In the conglomerate sector two stocks advanced, three declined and five were unchanged. Ansa Mcal posted a strong gain of 9.17 percent, but two large capitalization stocks, Jamaica Producers and Banks Holdings posted losses of 2.38 percent and 1.27 percent respectively. The Caribbean Conglomerate Index(CCSX)declined marginally to close the week at 1,068.4, down 1.05 percent year to date.

Investing School(Book Value Per Share)

The Book Value Per Share is the value per share reflected on a company’s balance sheet. It can be calculated as follows: Stockholders Equity-Preferred Stock

Average Outstanding Shares

On most stock markets it is rare for a stock to trade below its book value. A stock trading below its book value is often associated with a company in serious financial distress. Comparing the share price to the Book Value Per Share may indicate whether a stock is under or over valued. In the absence of evidence of severe financial distress, a stock trading below its book value tends to indicate an undervalued stock. From a Caribbean perspective, we often observe healthy companies trading below book value. This is likely due to the low level of trading on our markets and the consequent poor price discovery. Investors would be advised to be wary of selling their stocks at below book value.

The Caribbean Stock Report is published by the Department of Management Studies, Cave Hill, Barbados.

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