Stock Watch

BUSINESS DAY TV  |  Podcast , ±21 min episodes every 2 days  | 
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 — Google and Alibaba

Mia Kruger from Kruger International chose Google as her stock pick of the day and Nick Crail from Ashburton Investments chose Alibaba.

Kruger said: "I would choose the technology companies at this stage as their prices have also come back quite a bit with the rest of the market. Google with its strong advertising is a strong player in the online sector and that is definitely attractive for me at this stage. I'd be careful with entering into the market soon if I could just add that, we don't think that this is the end of the downturn and there is probably still more pain to come. I'd still be hoarding my cash and getting ready to get into the market a bit later"

Crail said: "My pick is technology, it is global and for myself it's Alibaba. I think obviously China is looking as though that v-shape recovery is going to be very quick, unlike what we were seeing at the moment in possibly Europe and certainly the US as well. Alibaba is attractive so that's where I'd be investing in today"

Stock Watch - Stock picks — Oil and BAT

Gary Booysen from RandSwiss chose Oil as his stock pick of the day and Ricus Reeders from PSG Wealth chose British American Tobacco.

Booysen said: "The reason the oil price is getting so crunched at the moment is in Saudi Arabia and Russia are having a spat and their supply is still not coming on stream aggressively but at the same time they are running out of storage. If you look at at those Baker Hughes numbers last week, rig counts are starting to fall and those shell producers are going to have to react, supply is going to start. If you've got a slightly longer term view and you're willing to hold I think the commodity will recover because obviously the supply side is going to correct and I've got a believe that these shutdowns are not going to go on permanently. Eventually we'll get our cars back on the road, the demand will pick up and at that stage you will see the commodity price lifting."

Reeders said: British American Tobacco has a great balance sheet and they are going to survive this crisis. Since this crisis started, everything just about flew into pieces except for tobacco which upped their production which is 70%."

Stock Watch - Stock picks — Royal Dutch Shell and Microsoft

Drikus Combrinck from Capicraft chose Royal Dutch Shell as his stock pick of the day and Nesan Nair of Sasfin Securities chose Microsoft.

Combrink said: "Royal Dutch Shell and oil company has a pristine balance sheet has a big dividend yield, obviously they can cut the yield but the oil price will return to more sustainable levels in due course, not sure when - it might be in 3 months or it might be in 3 years, it doesn't matter, for the long term investor this is a great entry point. This is the cheapest that you will see the energy sector for a very long time and this is one place where there is relative value."

Nair said: "I'm going for Mircosoft, even after this 21-day work from home period lapses, more and more companies will realise the benefit of having employees work from home. It is going to be inevitable and Microsoft is the biggest corporate cloud provider in the world so I can see their revenue stream is going to be quite healthy for many years to come"

Stock Watch - Stock picks — Market, Airbus and Disney

Wayne McCurrie from FNB Wealth & Investments chose the Market as his stock pick of the day and David Shapiro from Sasfin Securities chose Airbus & Disney

McCurrie said: "There are a few a good high quality companies that have survived through thick and thin over many many years and I don't know the future the market, it could fall another 50 percent I have no clue. The only thing I do know is at this level the market represents good long-term value so at bare minimum don't panic and sell, and if you have some spare cash don't spend at all today, phase it in. In these environments where there is absolute panic, chaos and mayhem the reality is that this is the only time the markets are cheap."

Shapiro said: "I have two, I think Disney and Airbus are looking incredibly cheap at the moment and I think the market has totally miss prices these, they've just been sold indiscriminately so if you've got patience I think you're going to do incredibly well on those"

Stock Watch - Stock picks — ADvTech, Spar and Shoprite

Chantal Marx from FNB Wealth & Investments chose Spar Group & Shoprite as her stock picks of the day and Joseph Busha from JM Busha Investments chose ADvTECH.

Marx said: "I quite like the food retailer, they have been sold off but not as much as the rest of the market and I don't think they're going to be sold off much more. Because firstly, grocery retailers have and will likely not be impacted as much by by the lock-down and then most of these companies also have a new liquor operations which lost some momentum in the last reporting period. With restaurants closing and unable to serve liquor up to a certain time you might see more off license purchases of alcohol. So I think that there are a few good drivers there and I particularly like Spar, I also like Shoprite but for my main thing."

Busha said: "ADvTECH results were very good, I mean a 60% growth in terms of revenue. Their headline earnings per share just about 20% and profits also up, so certainly I think one of their best purchases or acquisition was Monash, which they've renamed and they've got very good brands like Varsity College and Vega School. The Stock has been hammered it's down about 38% year-to-date and the share price is sitting at around R6,40 per share and I believe the fundamentals are in place, I think it is looking attractive now."

Stock Watch - Stock pick — Richemont

Ricus Reeders from PSG Wealth Sandton chose Richemont as his stock pick of the day and Mark du Toit from Oyster Catcher Investments chose cash.

Reeders said: "A week or so ago I said Bidvest but don't buy if it goes below R170 otherwise you will see a loss, now this has happened. It is the same scenario with Richemont. It is at about R19, which you really don't want to move below because there could easily be another 20% drop on it, but let's say that we are on some kind of bottom and as we said starting to nibble, then its defensive and has always been defensive and recession-proof. The main idea there is that even though they might have a loss of income in the short term it's not the guys that are buying Cartier that's going to lose their jobs, they just delay their purchases."

du Toit said: "I think that it's the right time to start putting a little bit of cash to work. I mean everything's corrected so hard and so fast I think you buy your 5 favourite stocks and just make sure that they don't have a debt problem on their balance sheet "

Stock Watch - Stock pick - Altron and Microsoft

Rowan Williams from Nitrogen Fund Managers chose Altron as his stock pick of the day and Deryck Janse van Rensburg from Anchor chose Microsoft.

Williams said: "I'm going to go with Altron, it's quite beating down from its highs and it's got a lot of exposure to the UK economy and Microsoft licensing so that's about 40% of their earnings which is hard currency earnings. We've seen the rand depreciate and the shares have come down as the rand depreciated so it's doubly attractive. We also think the other businesses which are exposed to the South African economy will continue to deliver so it looks like good value."

Janse van Rensburg said: "I'm going overseas into the tech space and picking Microsoft. I think that after the sell-off that we've seen across the board in the US markets, I guess it's not about trying to pick the bottom but it's about choosing quality stocks and deciding a price that you prepared to pay for those stocks. So, the recent pullback from $170 down to $140 I am certainly using as a buyer opportunity and this is a space that I want to be in over the long term"

Stock Watch - Stock picks — Vanguard Funds and Remgro

Gary Booysen from Rand Swiss chose Vanguard Funds Plc as his stock pick of the day and Graeme Körner from Körner Perspective chose Remgro.

Booysen said: "I'm going for VUKE which is the Vanguard tracker on the UK stock market. UK is about 4% or 5% off the lows from 2008, I don't there's not much downside. It's a higher beta index because of the commodity exposure in it and I think it's worth buying on a very attractive dividend yield"

Körner said: "I'm going for Remgro, I've been really critical of it for a long time but if you look FirstRand, it has been smashed, but Remgro actually lost quite a bit more than some of its underlying components, so it's a coward's option but there is clearly a strategy there to unlock the discount."

Stock Watch - Stock pick — AB Inbev

Drikus Combrinck from Capicraft chose AB Inbev as his stock pick of the day and and Petri Redelinghys from Herenya Capital had no stock pick. Combrink said:

"AB Inbev has lots of debt because the bought SAB brewery, they have volume problems in some of the traditional markets but they're still expanding margins. You've got a premiumisation and it was also my stock pick last week and it's cheaper, enough so I'm buying and I'm buying more. I'll continue buying even though there's a lot debt and it's a defensive company. Yes they might cut the dividend, so what. If you're a long term shareholder the dividend where it is paid or used to pay back other stuff it's fine. The lower oil price benefits them tremendously because they have transport a lot of the stuff across their vast footprint. So a lower price is actually very nice for their margins."​

Stock Watch - Stock picks — SA Govt Bonds and Casbuild

Rowan Williams from Nitrogen Fund Managers chose SA Govt Bonds as his stock pick of the day and Jean Pierre Verster from Protea Capital Management chose Cashbuild

Williams said: "We are still quite concerned about where stock markets are going to go from here so, it's not even a stock, we're saying South African
government bonds. They have the highest real yield in the world right now and that's not withstanding what we may see with a Moody's downgrade later in the month. These bonds are sub investment grade bonds that are yielding much lower in real terms and so structurally it seems like a very attractive proposition, 9%
nominal return with little risk as long as you hold to maturity sounds fairly appealing"

Verster said: "I'm going for Cashbuild, the shares got absolutely hammered from over R500 to around R160 and I do think that while there is pressure on the revenue line it is in the price to a large extent. The core business of distributing and selling building products I think is very defensive, people will continue to extend their homes or build on another unit in the in the backyard to rent out make some extra money. In the short term there might be pressure because of affordability but the business model and the strong balance sheet with a lot of cash on it means that they're well-positioned that, when the storm
passes I think the shares will end up looking very cheap with the benefit of hindsight."

Stock Watch - Stock picks — Berkshire Hathaway and Microsoft

Jonathan Fisher from PSG Wealth Sandton Grayston chose Berkshire Hathaway Inc as his stock pick of the day and Nesan Nair from Sasfin Securities chose Microsoft

Fisher said: "Berkshire Hathaway is a US based conglomerate involved in insurance, freight, rail transportation, utility businesses and reinsurance. Basically the company is sitting on a market cap of $476bn and just looking at the share price now this is the A-share is it at $295,000 a share and at their last earnings per share number which was for the year-end December now 2019, $49 000 per share. That puts them on a PE of around 5,9 times. That is very expensive but your viewers can go for the Berkshire B share which I think's trading at about $195"

Nair said: "Microsoft has a lot of cash so I think in this time if you could could identify which companies are being sold off for no reason and I think the tech stocks with their huge cash piles and their big global market shares are going to be around after COVID-19 and now is just an opportunity for you if you didn't get that opportunity late last year to actually start topping up on these things."

Stock Watch - Stock pick — Wells Fargo and Richemont

Drikus Combrinck from Capicraft chose Wells Fargo & Company as his stock pick of the day and Greg Katzenellenbogen from Sanlam Private Wealth chose Richemont.

Combrinck said: "Wells Fargo is my stock pick and is actually a blessing in disguise and that is in the fact that they've had regulatory limits so they haven't expanded the lending books really of the last year so. They've been buying back stock at higher levels albeit, but they're continuing to buy back stock and if you count the dividend at the rate that they're buying back stock at the moment it is at 18% f the share price, and that is a shareholder yield.

Katzenellenbogen said: "I would be watching Richmond, the share price has come back significantly because of the problems they were having in Hong Kong and now of course with coronavirus and people have been staying at home. But I do believe that this is a quality stock and with the stimulus measures that coming in Hong Kong they've been giving every resident something like ten thousand dollars each as a handout and I do believe that it looks like things are peaking in China and the rate of infection is coming down. China's starting to send people back to work so it doesn't mean go out tomorrow and buy Richemont but I would think that it's looking very attractive and if I was to pick a stock it would be that."

444 episodes

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