Stock Watch

You've seen the business news, got the gist of the bourses and heard what the country's top CEOs have to say. It's now time for some in-depth markets analysis.

This half hour show was the first of its kind in the business TV market in South Africa – every night our anchors are joined by two markets experts who tell you what shares to be buying, holding or selling.

A Tiso Blackstar Group Production.

Keywords: money, opportunity, business plan, business ideas, business news, income, financial news

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Stock Watch - Stock picks — Home Depot and Sibanye

Wayne McCurrie from FNB Wealth & Investments chose Home Depot as his stock pick of the day and David Shapiro from Sasfin Securities chose Sibanye-Stillwater.

McCurrie said: "I'm getting on to this and maybe it's a bit late in the day, this DIY stay at home story. You look at Cashbuild's and Builders' results and they are fantastic. So I'm going to go for a Home Depot in America. They came out with a very good set of results, people are literally staying at home and fixing all the things at home. Now I know that it won't last forever, but
it looks like a reasonable short term investment. It's a good company, it has strong cash flows, so
maybe it's a little bit of a boring pick, but I think a fairly solid pick"

Shapiro said: "Well I think out of all the results that I went through, the two that stand out is Sibanye and Kumba, and admittedly Anglo Plats as well. But, I think I will just go for Sibanye, I just think Froneman is something else."

Stock Watch - Stock picks — JSE and Inditex

Karl Gevers from Benguela Global Fund Managers chose JSE Limited as his stock pick of the day and Jean Pierre Verster from Protea Capital Managers chose Inditex.

Gevers said: "I would probably buy JSE limited, the stock exchange. I think in terms of defensiveness it certainly has defensive characteristics and generally benefits from the increase in volatility.

Verster said: "I'm picking a stock listed in Spain called Inditex. South Africans would know them as the holding company for Zara and Zara home and last year was terrible for them as it was for all clothing retailers. They'll announce their full year profits in early March and I expect those profits to be down 60% but, near the end of last year we started to see the green shoots of people going back and buying some clothes again."

Stock Watch - Stock picks — Remgro and BAT

Gerbrand Smit from N-e-F-G Frund Managers chose Remgro as his stock pick of the day and Chantal Marx from FNB Wealth & Investments chose BAT.

Smit said: "I'm going for Remgro, it's holding company, I know they're out of favour for quite some time but it's sitting at a huge discount to what the NAV was and in the end of June. We are now in much higher markets and we know that some of the assets has actually grown considerably, especially FirstRand, RMI and some other investments, so I think at a 35% discount at June last year's valuation, you're going to see some better net asset value coming out with end of December numbers and you'll probably see some rewriting on the day. So, I think there's an easy 15% to 20% to be made on Remgro with not much risk.

Marx said:" I'm also going to punt an old punt, British American Tobacco. The stock still looks very very cheap, you've got an 8,5% dividend yield, so even if the share price doesn't go anywhere you still get compensated quite adequately for taking that position."

Stock Watch - Stock picks — Remgro and Rand/Dollar

Gerbrand Smit from N-e-F-G Fund Managers chose Remgro as his stock pick of the day and Gary Booysen from Rand Swiss chose Rand/Dollar.

Smit said: "I'm going to go for Remgro again. I picked it at similar levels the last two times and I think markets are much higher than where it were June the 30th last year. We know what happened to markets, they certainly corrected from where they were then so and they already trading at a discount of more than 35 on those numbers. You're going to see higher net asset values coming out for the end of December in the next week or three and then I think you might see some re-rating of the stock."Booysen said: "

I'm just thinking about the currency play on the rand/dollar. I know we talked about the commodity super cycle, everyone thinks maybe that the currency is going to get stronger and I think a lot of that is priced in given the huge re-rating that we've seen over the last six months.

Stock Watch - Stock picks — CVS Health and L'Oreal

Wayne McCurrie from FNB Wealth & Investments chose CVS Health as his stock pick of the day and David Shapiro from Sasfin Securities chose L’Oreal.

McCurrie said: "I'm going with an American company called CVS Health, a hospital health group and they came out with their results on Tuesday. Slightly disappointing results but their outlook is very very good. They're forming some alliances and with people going online, they've hit the mark with healthcare at home. Their price earnings ratio looks relatively low."

Shapiro said: "I'm going for L'Oreal, they have very good skincare products and coming on the back of some very good numbers, I think stay at home people, the return of the Asian markets has been pushing up the demand for skincare - particularly online."

Stock Watch - Stock picks — Afrimat and Kumba Iron-ore

Independent Analyst Chris Gilmour chose Afrimat as his stock pick of the day and Joseph Busha from JM Busha Investments chose Kumba Iron ore.

Gilmour said: "I believe we're actually on the cusp of a commodity super cycle and I think iron ore is going to do as well as just about any of them, particularly with Chinese infrastructure demand. So, again for me it really is Afromat. The company and the shares are not, in my opinion reflecting the intrinsic worth of the underlying worth of the company."

Busha said: "I'll just go from a momentum perspective and possibly go for Kumba, I think they might just rise a little bit. They pay good dividends and they some legs."

Stock Watch - Stock pick — Northam Platinum and WBHO

Nick Kunze from Sanlam Private Wealth chose Northam Platinum as his stock pick and Meryl Pick from Old Mutual Investments chose WBHO.

Kunze said: "I'm sticking with the platinum mining theme, this week we had BHP Billiton, today Sibanye and so I'm going with Northam Platinum. We'​ve got quite a few coming out this week and I think given what we've seen so far, Northam are not going to disappoint. I like the whole story, it's around R200 a share at the moment."

Pick said: "I'm going to go contrarian was something that's been unloved recently and that is WBHO, one of the last men standing in the construction sector in SA along with Murray and Roberts. I think there's an entry point being created here because they've had losses in some of the Australian projects in the Australian division but I suppose it's a bet on SA getting some infrastructure spend
going to stimulate economy."

Stock Watch - Stock picks — MTN and Investec

Nesan Nair from Sasfin Securities chose MTN as his stock pick of the day and Mark du Toit from Oyster Catcher Investments chose Investec​.

Nair said: "I'm going to go with the local stock, MTN. Mark mentioned this theme that it looks like some of the local shares have turned around earnings wise. We saw Telkom and MTN have very good trading updates, so I think maybe, potentially, fingers crossed, we could be seeing a turnaround in the telco space right now."

du Toit said: "We like the the SA banking sector and within that I'm going to go for the the higher risk option which is Investec. Domestics business of 60% South Africa and 40% UK and then within the business 70% banking and 30% wealth. They unbundled most of their holding in the asset management business Ninety One but they still have a 25% stake in the business which they will sell down over time. They're only trading at about 40% to book value, so there is quite a lot of upside to come but it does come with its risks"

Stock Watch - Stock picks — Commodities and Long4Life

David Shapiro from Sasfin Securities is looking at commodity prices and Wayne McCurrie from FNB Wealth & Investments chose Long4Life.

Shapiro said: "I could buy anything today, I haven't even thought about it etc because everything's going up and it's so difficult to try and identify any particular business. I must tell you that I have been impressed by where commodity prices are going. For the first time in a long time I'm not averse to things like Anglo American or BHP Billiton at these kind of levels."

McCurrie said: "I was going to go for a big discount share, Naspers but after talking about Long4Life, there's another big discount share so why not and there's a big discount to nav."

Stock Watch - Farmland Partners and Admiral Group

Drikus Combrinck from Capicraft chose Farmland Partners Pref share as his stock pick of the day and Jean Pierre Verster from Protea Capital Management chose Admiral Group.

Combrinck said: "My pick is Farmland Partners is listed REIT in the US. I'm buying the preferred as well, the preferred is actually my stock pick and the preferred share yields about 6% at the stage. But they've got a kicker and the kicker is that you get 50% of the participation in a broad index of farmland​ in the US which I am bullish on. And if that doesn't realize you still get your 6%."

Verster said: "My stock pick is a short-term insurer listed in the UK called Admiral Group, they focus on motor vehicle short-term insurance. They have very good underwriting margins, combined ratios in the 80s as a percent which is world-class. They are growing their market share is and it is increasing in the UK and they've expanded to Europe and the US as well"

Stock Watch - Stock pick — Intel and Merck

Deryck Janse van Rensburg from Anchor chose Intel as his stock pick of the day and Nick Crail from Asburton Investments chose Merck​.

Janse van Rensburg said: "My pick is Intel, it's a very well know worldwide brand and it's obviously been in the tech industry for many many years. The company suffered for quite some time as we saw this big tick up and as they adapted to the environment that we are exposed to and that we know today. There is a little bit of a reject going on in the company at the moment where there's a new CEO coming in and I certainly think he's going to bring a little bit of flair to the company that's going to give it a different trajectory and I'm looking forward to that.Crail said: "My stock pick is offshore, and it's a company that I think has taken a bit of a beating through the pandemic and they are 20% off where it was trading before the pandemic started. It is a large pharmaceutical company called Merck and it's listed in the US. They recently came out with a set of results that show that it probably, through the course of the pandemic lost around 5% of its top line due to the pandemic, but I think as we watch more and more of these vaccines happen, especially in the developed world and the world returning to normal, I think this is certainly a stock that can play a lot of catch up moving forward."

Stock Watch - Stock picks — Bidcorp and HSBC

Chantal Marx from FNB Wealth & Investments chose Bidcorp as her stock pick of the day and Graeme Körner from Körner Perspective chose HSBC.

Marx said: "My stock pick is BidCorp, it's a big food services company which was spun out of Bidvest a few years ago. I think that with the normalisation of economic activity and a return to mobility, people going to bars, restaurants and hotels, BidCorp could be a key beneficiary there. They drive those big cold chain trucks that deliver fresh ingredients to restaurants and hotels and I think that they are going to win when everyone starts going out again."

Körner said: "I'm going with HSBC, the BOE warning of interest rates, you'd say, why are you running into this burning building but the reality is the banks have been been battling with with very low net interest margins for some time and our hypothesis is it's still fundamentally a good business"

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