1. SABMILLER 2. RICHEMONT 3. BAT 4. SASOL 5. BHP BILLITON
like Novartis, BMW, LVMH, Total and Royal Dutch Shell. I also think America will stage a strong comeback driven by its investment in natural gas and technology. Cheap energy (natural gas) will support re-shoring – bringing back manufacturing from offshore. Remember wages in the US have remained static while rising in nations like China – so the cost gap is narrowing.
But how does this shape our investment strategy and what can we buy on the JSE to meet these trends? I have to go with our heavyweights – I think they will continue to dominate investment returns for a long time.
Big brands that will get bigger – SABMiller, Richemont and British American Tobacco – as the developing nations get richer they will smoke, booze and want to buy the most expensive watches they can lay their hands on.
I think Aspen will knock the lights out as well – spreading into South Amer- ica and Asia Pacific – but I don’t think the brand will last 10 years – it will be bought out by GlaxoSmithKline – so I’m leaving it off. I’m also concerned about Bidvest – in 10 years’ time Joffe will be 75. I’m a great follower and supporter of his. He has a superb management team but I still think he is the glue that keeps everything together. Don’t get me wrong, he still has a lot of fight in him but we’re talking 2023! While we’re speculating, I think Shoprite is best placed to grow into Africa, but once more I think retailers rely heavily on the quality of management and without Whitey (he’s already getting twitchy) I have to pass on this one.
So my last two stocks are Sasol and BHP Billiton. I think Sasol will be a winner in the US, well placed to take advantage of the growth in the natural gas fields as well as providing the chemical feedstock for a number of manufacturing operations that will emerge from the availability of cheap energy.
Last, I will go with BHP Billiton – I’m beginning to question whether we’re really in a super-cycle but even if we’re not, the company has good assets (copper, iron ore, coal and oil) at the low end of the cost curve and I think it’s best placed out of all the miners to score from ongoing to demand for resources – it will continue.
And to f inally end… remember the golden rule – buy high, sell higher.