Stock picks — BAT and Unilever
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Siboniso Nxumalo from Old Mutual Investments chose BAT as his stock pick of the day and Mia Kruger from Kruger International chose Unilever.
Nxumalo said: "If you look at British American Tobacco the issue there in terms of why the price has collapsed or underperformed is largely because of raw cigarette volumes which have been trending downwards. With the new generation products pickup that slack. We look at it and we say well, this is largely relevant if you look at what's in the price and the price you're getting at 8% dividend yield you're buying it at an 8% earnings multiple and you're getting about 8% earnings growth and so therefore you are likely to get 15% return without doing too much."
Kruger said: "The one that I want to the single out is Unilever. If you consider that Unilever has a very very strong personal care and goods company in the world. They've got over 400 brands, they operate in over 190 countries around the world, they've got some of the strongest brands that are the biggest producer of soap in the world and more than two and a half billion people use their products daily."
Nxumalo said: "If you look at British American Tobacco the issue there in terms of why the price has collapsed or underperformed is largely because of raw cigarette volumes which have been trending downwards. With the new generation products pickup that slack. We look at it and we say well, this is largely relevant if you look at what's in the price and the price you're getting at 8% dividend yield you're buying it at an 8% earnings multiple and you're getting about 8% earnings growth and so therefore you are likely to get 15% return without doing too much."
Kruger said: "The one that I want to the single out is Unilever. If you consider that Unilever has a very very strong personal care and goods company in the world. They've got over 400 brands, they operate in over 190 countries around the world, they've got some of the strongest brands that are the biggest producer of soap in the world and more than two and a half billion people use their products daily."