Stock Watch

BUSINESS DAY TV  |  Podcast , ±20 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 pick — Tech stocks

David Shapiro from Sasfin Securities chose Tech Stocks as his stock pick of the day.

McCurrie said: "I'm sitting back, even though I recognize there's value this rally has been too quick too soon and I think it can go back maybe not to its previous levels but we have still got to get to the peak of the bad news being reported. Will the economy shrink 6% or 15%, will unemployment in the US be 10% or 80%, will retail sales have fallen 30% or 50%, we just don't know that yet, so I'm going to sit back for a while."

Shapiro said: "I'm tech bullish, I looked at Netflix numbers, even though the shares are down they increased their subscribers by double the amount that they expected, nearly 16 million new subscribers. What I'm highlighting here and I'm not saying go and buy Netflix, it's just how much tech has changed the lock down and just how much they've grown. So, just keep an eye on tech all of them are going to get staggering results coming up"

Stock Watch - Stock picks — Progressive Corp and Naspers

Jean Pierre Verster from Protea Capital Management chose Progressive Corporation as his stock pick of the day and Rowan Williams from Nitrogen Fund Managers chose Naspers

Verster said: "My stock pick is a short-term insurer listed in the US called Progressive Insurance the share code in the US is PGR and they're almost like the OUTsurance equivalent in the US. Like I explained short term insurance is very low risk at the moment, people still pay their premiums so I think it's a share that is a good one for the long term where you won't be negatively impacted from dividend cuts."

Williams said: "I'm going to be conservative and just say stick with Naspers. You've got a rand hedge there and you've got an asset in Tencent which is certainly going be a beneficiary from the changes we're going to see in consumption patterns and human behaviour. You get a 50% discount NAV, it's not a difficult decision to make and that to me makes a lot of sense."

Stock Watch - Stock picks — Yum China Holdings and Naspers

Chantal Marx from FNB Wealth & Investments chose Yum China Holdings as her stock pick of the day and Joseph Busha from JM Busha Investments chose Naspers.

Marx said: "My stock pick tonight is Yum China, it's the largest takeaway business or restaurant business in China from a listed perspective. They own KFC and Pizza Huts, they've been expanding quite rapidly in that market but they're still not in a thousand large cities so a lot of runway left there for them. Then of course, I mean China is changing quite rapidly and post Covid-19 people are going to get out there and they're going to KFC burgers"

Busha said: "I'm looking at Naspers, I think Naspers has done fantastic and in the way that they managed Covid-19 very well. For the month a 31% year-to-date 20%. Towards the end of last year that was a lot of M&A activities around Prosus and Naspers itself and with Nasper holding 74% of Prosus, I believe that both their classifieds and delivery business is going to do well."

Stock Watch - Stock picks — cash and gold

Alex Duys from Umthombo Wealth chose cash as his stock pick of the day and Drikus Combrink from Capicraft chose Gold.

Duys said: "I'm actually quite conservative at this stage, and as a result I actually think the basic approach would be to be in cash at this time. I'm not convinced by the strong rand that we've seen in equity market since the recent drops, especially in the US and I think if you got excess cash at the moment, be patient. I think extent of the Covid-19's impact still yet to be determined and also the path to normality is going to be very difficult to determine. I will not be jumping the gun now or looking to over expose myself.

Combrink said: "Since middle March we've been all in and slightly lowering our exposure and we've been buying gold."

Stock Watch - Stock picks — retailers and FAANG

Wayne McCurrie from FNB Wealth and Investments chose Retailers as his stock pick of the day and David Shapiro from Sasfin Securities chose FAANG Stocks.

McCurrie said: "I think you can pick SA retailers, I think that you can go for Spar, Pick 'n Pay or Shoprite. I'd be a little bit cautious about Woolies but that's because of Australia. But you know it once again a consistent theme and I hope I'm not boring anyone, but when life return to some form of normality these shares will also return to some form of normality."

Shapiro said: "You have to buy the FAANGS, and not only the FAANGS but also those semiconductor companies and I think those companies are just going to get stronger and stronger. And they are not going to have regulators onto them wanting to break them up and split them up and so on, they are just generating cash so if you do want to place yourself in one part of the market just stay with FAANGS."

Stock Watch - Stock picks — Amazon and Alphabet

Nesan Nair from Sasfin Securities chose Amazon as his stock pick of the day and Mia Kruger from Kruger International chose Alphabet.

Nair said: "I'm going with Amazon, I think they are priced quite well so far and I anticipate that they'll grow from here."

Kurger said: "I'm going for Google, it is one of the companies that haven't rebounded as strongly as Amazon and some of the others and I think also this is Google will definitely increase their revenue due to that advertisement space. YouTube is also quite popular in these times where people have a lot of time on their hands so I think the company will do well from this point going forward."

Stock Watch - Stock pick - AECI

Independent Analyst Chris Gilmour did not have a stock pick but Ricus Reeders from PSG Wealth Sandton chose AECI

Gilmour said: Take a 10-year view because then there's an awful lot of perceived an apparent value and so many things can can go bad. I'd be sitting on my hands, I really wouldn't be venturing into this market at all at this point.

Reeders said: "As I've said in the past few weeks anything that I said looks interesting comes about with that big caveat and that you should have a stop-loss in place. Today is AECI, and I've had that previously and today the listing was at about R70 but on the other hand its cash-flow has allowed to see itself throught his period and putting some of your money in this and starting to nibble at these levels will probably in 5-6 years give you a pretty good your return.

Stock Watch - Stock picks — SA inc and Telkom

Wayne McCurrie from FNB Wealth & Investments chose SA inc stocks and FirstRand as his stock picks for the day and Gary Booysen from Rand Swiss chose Citibank and Telkom

McCurrie said: "I think SA inc shares are incredibly cheap and the banks are trading at abnormally low discounts so I would suggest to pick a bank like FirstRand because I think it is cheap. We also spoke about properties, dividends will return, they will come back to some form of normality so in 3 years’ time you can be getting an 18% yield on your property shares if you buy them now.

Booysen said: "I think Citybank if you want to buy something overseas, it's looking really attractive but locally I think Telkom is very attractively priced at this low level. It is sitting at a very low level since the Corona outbreak. They are a fixed line operator, people are using more data, ICASA has opened up Spectrum for them as well and they are still going to lay off staff as it has been part of the plan for a long time and I don't see the CEO as wasting a good crisis, he is going to get Telkom in very good shape."

Stock Watch - Stock picks — Facebook and Afrimat

Jean Pierre Verster from Protea Capital Management chose Facebook as his stock pick of the day and Mark du Toit from Oyster Catcher Investments chose Afrimat.

Verster said: "I picked Facebook not too long ago and I still think that with more people at home, maybe being a little bit bored and wanting some entertainment, they might start scrolling and reactivating their Facebook accounts. Although there will be a lull in advertising because businesses aren't operating, I also think that with more eyeballs on the Facebook platform those advertisers will come back and might put a larger part of their budget to online advertising on something like Facebook versus TV or radio, so I would still pick Facebook."

du Toit said: "The theme for me at the moment is to pick companies with strong management and strong balance sheets and the company that we picked and also picked in the past Afrimat. They are still doing very well at the moment because their iron-ore mine is still operational although they have halved the amount of staff at the mine, they are still exporting iron-ore. With the much weaker rand price form a SA point of view, they are still making decent cash."

Stock Watch - Stock picks — MTN and Amazon

Nick Kunze from Sanlam Private Wealth chose MTN as his stock pick of the day and Nesan Nair from Sasfin Securities chose Amazon. Kunze said: "We like MTN at the moment, we like it at current levels and we've been buying it last week. I think it sticks with our theme of normal people working from home, chewing up data much like we are now. MTN is one of the most recognizable brands on the the continent and the more people will adapt to this new way of life. MTN's levels were down almost 70% from its highs, it has bounced back quite recently. It's not demanding, sitting on a forward p/e of less than 10 times with a dividend yield of close to the 12%."

Nair said: "I'm going to stick with a similar sort of theme, I'm going with Amazon, I think cloud businesses are gonna grow a lot more from this point onwards and so does online retailing."

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%."

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