FINWEEK’S PICK OF SIX RESISTANT SMALL CAPS
This company offers top-rated private education brands along with human resourcing services. A good education is nonnegotiable in SA, which makes Crawford Colleges almost a default option for parents wanting to give their kids a “learning” option outside the mainstream. Advtech’s human resourcing business should do well in a downturn, with companies more likely to use contract workers than rehire permanent staff.
A superbly managed fishing business that covers almost every nook of the seafood industry. Lucky Star is an exceptional brand found in most households throughout SA. The group’s large export business is bound to benefit from the weaker rand. With a strong balance sheet under its belt, dividends could be generous.
A great “budget” brand offering guests solid, no-frills accommodation. As companies look to trim their essential travel costs you can bet City Lodge (or its variants, the Road Lodge and Town Lodge) will be running near full capacity. City Lodge has an experienced and dedicated management team with reassuring cash flows and a strong balance sheet to boot. And great value also resides in its properties.
juncture, but Bowler Metcalf has carved an enviable niche in plastics and bottling. Over the years it has put larger competitors, such as Nampak and Astrapak, in the shade. More importantly, Bowler Metcalf has seen (and survived) several downturns since listing in 1987. The group not only holds solid annuity income from contracts to produce “everyday items” for blue chip clients but the cash generative business is also run by a no nonsense team with an eye on the margin at all times.
As so-called “sin stocks” go Tote operator Phumelela may make a more compelling option that traditional gaming groups listed on the JSE. The group dominates SA’s racing market – where a dedicated following should ensure revenues aren’t affected too badly by any economic downturn. Phumelela’s offshore business is also starting to pick up pace.
“The people shall drink… especially in hard times,” so it’s said. Distell owns a superb range of liquor brands – capturing the young and the restless (ciders and ready-to-drinks), the regular wine tipplers (Nederburg, Fleur du Cap), the connoisseurs (premium brandy) and the exotics (Amarula). This highly profitable company will also have the luxury of a weaker rand to offset in further deterioration in its numerous foreign markets.