An­a­lysts choose the stocks they ex­pect will of­fer the most value to in­vestors.

Finweek English Edition - - FRONT PAGE - edi­to­rial@fin­

Gary McNa­mara Portfolio man­ager at San­lam

Ad­cock In­gram

While McNa­mara says this busi­ness has per­formed poorly on the stock mar­ket over the past two years, the re­cent sale of the non-core In­dian busi­ness, to­gether with management’s fo­cus on re­duc­ing debt over this pe­riod, has left the com­pany with a strong bal­ance sheet and very lit­tle debt.

The share is cur­rently trad­ing at R48 apiece and on a his­toric div­i­dend yield of 2.5%.


While this com­pany has been hard-hit by the Brexit vote, McNa­mara be­lieves that a sum-of-the-parts valu­a­tion of the busi­ness puts its share value at ap­proach­ing R110 apiece.

With a div­i­dend yield ap­proach­ing 5% and a re­cov­ery in in­ter­est rates for off­shore banks post the re­cent Trump vic­tory, a rerat­ing of the share could be on the cards.

In­vestec posted one-year re­turns of -6.37% and is cur­rently trad­ing at around R93.

Wool­worths Hold­ings

While this share price has been un­der pres­sure in re­cent months due to some poor com­peti­tor trad­ing up­dates on a his­toric price-to-earn­ings ra­tio (P/E) of 15 times with a div­i­dend yield ap­proach­ing 5%, McNa­mara finds the com­pany “very at­trac­tive” at cur­rent lev­els.

Wool­worths of­fered dis­ap­point­ing re­turns in 2016 of -23.37% and is cur­rently trad­ing at about R65.26 a share.

Pi­eter Fourie Global head of eq­ui­ties at San­lam Pri­vate Wealth UK

Pernod Ri­card

Fourie says Pernod’s share price has un­der­per­formed for a few years and ap­pears at­trac­tive, at 16 times earn­ings for 2017. The com­pany also re­mains geared to­wards a wider re­cov­ery in liquor sales in Asia af­ter a very sub­dued pe­riod over the past three years.

The Paris-listed group of­fered oneyear re­turns of 7.52% and is cur­rently trad­ing at €104.95 a share.


De­scrib­ing the com­pany’s global reach and con­sis­tent or­ganic growth as, in many ways, “un­ri­valled”, Fourie notes that Nestlé has grown div­i­dends per share by 8% com­pound over 25 years.

While the com­pany has strug­gled to per­form over the past few years, he ex­pects an­nounced sav­ings of at least 150 ba­sis points in op­er­at­ing mar­gin over the 2017-2020 pe­riod.

Nestlé of­fered re­turns on the US ex­change of 8.17% in 2016, with the share cur­rently trad­ing at around $74.70.

Aberdeen As­set Management

Even though the external en­vi­ron­ment re­mains tough for the com­pany, Fourie says it re­mains geared to­wards a gen­eral re­cov­ery in eq­uity mar­kets and emerg­ing mar­kets in par­tic­u­lar.

The stock is trad­ing on 12 times earn­ings for 2017 and yields 5% at cur­rent lev­els.

Aberdeen of­fered full-year re­turn of 15.39% on the Lon­don stock ex­change in 2016, and is cur­rently trad­ing at around £272.50.

Adrian Sav­ille Chief strate­gist at Ci­tadel


Sav­ille’s pick of the in­ter­na­tion­ally listed au­to­mo­tive man­u­fac­turer comes de­spite it post­ing year-to-date re­turns of only 2.55% on the New York Stock Ex­change in 2016.

Cur­rently trad­ing at around $31.31 apiece, the com­pany’s de­ploy­ment of its self-driv­ing 7-Se­ries fleet to the road this year could see an uptick in the share price.

Group Five

The heavy con­struc­tion group saw one-year re­turns, in­clud­ing div­i­dends, of 37.18% in 2016, with earn­ings per share of R3.35.

The share is cur­rently trad­ing at around R26.

Wool­worths Hold­ings

The group posted one-year re­turns of -23.37% in 2016 and earn­ings per share of R4.56. Up­side po­ten­tial re­sides in the re­cent ac­qui­si­tion of re­tail op­er­a­tions in Aus­tralia.

It is cur­rently trad­ing at around R65.26 a share.

Steven Schultz Head of mar­ket­ing at Mo­men­tum In­vest­ments


Glen­core is an in­te­grated pro­ducer and mar­keter of com­modi­ties, with world­wide ac­tiv­i­ties in the mar­ket­ing of met­als and min­er­als, en­ergy prod­ucts and agri­cul­tural prod­ucts.

The share of­fered re­turns of 165.39% in 2016 and is cur­rently trad­ing at around R52.19.

BHP Bil­li­ton

The Lon­don-listed global re­sources com­pany, which is among the world's top pro­duc­ers of ma­jor com­modi­ties, of­fered a one-year re­turn of 109.40% in 2016 and is cur­rently trad­ing at £14.26 a share.

The group’s strong per­for­mance into the new year can largely be at­trib­uted to sky­rock­et­ing de­mand for met­al­lur­gi­cal coal.

Medi­clinic In­ter­na­tional

A com­bi­na­tion of fac­tors has seen a share price de­cline of 40% from its June 2016 peak of R211.00, but Schultz be­lieves the share of­fers good up­side po­ten­tial.

Of­fer­ing year-to-date re­turns, in­clud­ing div­i­dends, of -0.50%, Medi­clinic is cur­rently trad­ing at around R131.15 on the Jo­han­nes­burg bourse.

Sizwe Mkhwanazi Portfolio man­ager at San­lam

Stan­dard Bank

Mkhwanazi be­lieves Stan­dard Bank’s plans to in­vest $100m in ICBC Stan­dard Bank will put the bank in a good po­si­tion as the cy­cle be­gins to turn.

The bank has also in­vested heav­ily in IT in­fra­struc­ture to con­vert its core bank­ing sys­tem. Stan­dard Bank is cur­rently trad­ing on 1.6 times price to book and 4.65% his­toric div­i­dend yield and is an “ex­cel­lent” div­i­dend payer.

Stan­dard Bank of­fered a yearly re­turn of 53.54% in 2016 and is cur­rently trad­ing at around R150.49.

An­heuser-Busch InBev (AB InBev)

Earn­ings are ex­pected to grow be­tween 7% and 9%, and op­er­at­ing mar­gins should im­prove from 31.9% to 33% over the next few years, says Mkhwanazi. This share of­fers rand hedge qual­i­ties and at the cur­rent level of about R1 450 of­fers good value over the long term.

AB InBev of­fered re­turns from its US list­ing in 2016 of -6.36% and is cur­rently trad­ing in the re­gion of $105.64.

Im­pala Plat­inum

Al­though the World Plat­inum In­vest­ment Coun­cil’s lat­est re­port has in­di­cated a de­crease in au­to­cat­a­lyst de­mand, it re­mains the main driver of plat­inum use and Im­pala Plat­inum should ben­e­fit from this, Mkhwanazi holds.

The plat­inum price has de­clined since the Novem­ber US pres­i­den­tial elec­tions, re­sult­ing in a neg­a­tive ef­fect on plat­inum shares. Mkhwanazi has a tar­get price of R66 over the next 12 months.

Im­pala of­fered full-year re­turns of 78.29% in 2016 and is cur­rently trad­ing at R42.70 a share.

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