On the punt
THERE ARE three counters that I have been eyeing for my small Contracts For Difference (CFD) trading account in the last few weeks: Exxaro, African Bank Investments Limited (Abil) and Steinhoff. Both Exxaro and Abil are now sitting in my current target range and recently Steinhoff seems to be getting close to a level I would feel comfortable buying.
With Steinhoff now trading at below R24/ share the temptation is there to pull the trigger, but I suspect if you are patient, you might be able to get in nearer R21/share if equity markets sell down this week.
On the plus side, Steinhoff trades on a single-digit p:e multiple, offers some interesting rand-hedge characteristics and has some quality institutional shareholders – Investec Asset Management (15%) and Foord Asset Management (5%) – which suggests value in the long run. On the negative side, the exposure to Europe is weighing on the group.
Wait for a break beneath R22 and then see if you can go long with a bit of gearing.