5 JSE stock picks to watch in April
Five prominent South African investment analysts and portfolio managers have selected five local companies that offer excellent prospects and future value – Naspers, The Foschini Group, FirstRand, Bidvest, and Anglo American.
The investment analysts and portfolio managers are:
- Patrice Rassou from Ashburton Investments;
- Mark du Toit from Oyster Catcher Investments;
- Nick Crail from FNB Wealth and Investments;
- Grant Nader from Benguela Global; and
- Wayne McCurrie from FNB Wealth and Investments.
The companies have been selected for their attractive share price and encouraging prospects for medium to long-term investors.
The five local stocks you should consider, explaining why these investment professionals find these companies to be a good buy, are listed below.
Naspers
Naspers Limited is a South African multinational internet, technology and multimedia holding company headquartered in Cape Town with interests in online retail, publishing and venture capital investment.
Rassou believes Naspers is a value buy as it will benefit significantly from the re-opening of the Chinese economy after being out of favour in recent months.
He added that this has the company’s share price at a fair value for investors.
Naspers’ year-to-date (YTD) share price has gained 11% as of 17 April, reflecting a Price-to-Earnings (PE) ratio of 16.8 times.
Its annual growth forecast sits at 19.3% compared to the industry’s 10.5% and the market’s 6.1%.
The Foschini Group
TFG Limited, also known as The Foschini Group, is a South African retail clothing group which trades under various brands and has more than 3,000 stores within its portfolio.
Du Toit believes TFG is a great buy for investors as it is undervalued as the share price has been unfairly punished.
He said that while the current trading period will present some difficulties for the group, Oyster Catcher’s forecasts indicate that the stock will return north of 10% in the medium term.
Du Toit added that TFG had made solid acquisitions in Jet and Tapestry, which will expose the group to new products and categories.
He believes that TFG will weather the short-term storm, showing predictable revenue and earnings growth, and investors can expect an annual return of around 20%.
Foschini Group’s stock PE Ratio of 9.70 is close to a 2-year low of 9.53, and its dividend yield is close to a 2-year high – offering great value for prospective buyers.
FirstRand
Crail offered a similar sentiment as du Toit and said South African stocks had been beaten down unfairly, presenting significant opportunities in the medium term.
Over the past few months, pessimism has crept through amid uncertain economic times, clouding sectors that have shown promising growth.
One such sector is the banking industry. Crail said although a pick of any bank is an excellent addition to one’s portfolio, FirstRand is showing several good signs of growth and is undervalued at a current offering of only R64 per share as of 17 April.
Firstrand is in a good financial position and stable, with enough cash to cover all its debt.
Firstrand’s stock PB Ratio of 2.05 is close to a 1-year low of 1.85, while its PE Ratio of 10.37 is close to a 2-year low of 9.96.
The bank’s dividend yield is also close to a 2-year high – another stock offering great value for prospective buyers.
Bidvest Group
The Bidvest Group is a South African service, trading, and distribution company operating on four continents.
Nader believes Bidvest showed great entrepreneurial aspects in its latest financials, tapping into two of the significant challenges facing South Africa: logistics focused on Transnet’s distribution network and renewables in the face of the energy crisis.
Nader said their freight transport operations have significantly benefitted from Transnet’s shortcomings, and their renewables offerings have grown over 500%.
He added that the company’s operating margin is expanding, which is usually a good sign, and with good liquidity.
Bidvest’s stock dividend yield is also currently close to a 1-year high.
Anglo American
Anglo-American is a multinational mining company with around 40% of the world’s output and a major producer of diamonds, copper, nickel, iron ore and steelmaking coal.
McCurrie believes its current share price offers great future value, trading at 5.7% below its fair value.
Anglo-American also offers a decent dividend yield of almost 6%, and its stock PB Ratio of 1.59 is close to its 2-year low of 1.49.
McCurrie noted that Anglo-American’s performance is highly procyclical and susceptible to global economic environments.
However, the economy always recovers, and McCurrie believes Anglo-American will offer excellent returns in the medium to long term as and when the economic conditions improve.
Read: 4 tax updates to watch out for in South Africa – including solar and medical aid
