Stock Watch - Exxaro and cash
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Deryck Janse van Rensburg from Anchor Securities chose Exxaro Resources Ltd as his stock pick of the day and Paul Chakaduka from GT247.com chose cash
Janse van Rensburg said: “I've been keeping an eye on it and we saw last week that there was a transaction where they offloaded some of their Tronox shares. It was about half of their value and that was done at a very favorable price. They announced it to the market and said that they are going to use the cash for cash obligations inside the business and the potential of distributions to shareholders. This is an extremely high dividend payer and if you just look at it from a fundamental perspective it's one of the cheaper resource stocks out there. I certainly think that if you hold it looking 12 months out you are certainly going to be rewarded with very strong cash flows in the form of dividends. We are in the eye of a storm of a bit with the trade war between China and the US so Exxaro can be a little bit more pertinent on your timing, maybe it comes down into the 140s or below 150 but certainly below 150 it is starting to scream significant fundamental values. Take a bit of a patient buy/hold and as it starts to dip to the levels that we're seeing at the moment just build your position and be patient."
Chakaduka said: “With the trade wars and domestic elections you are going to get opportunities much lower down I'll be really interested to see how a Cyril Ramaphosa maneuvers this phase in his political career and I think there could be opportunities which all of us will be happy to to pick up in the next couple of weeks.”
Janse van Rensburg said: “I've been keeping an eye on it and we saw last week that there was a transaction where they offloaded some of their Tronox shares. It was about half of their value and that was done at a very favorable price. They announced it to the market and said that they are going to use the cash for cash obligations inside the business and the potential of distributions to shareholders. This is an extremely high dividend payer and if you just look at it from a fundamental perspective it's one of the cheaper resource stocks out there. I certainly think that if you hold it looking 12 months out you are certainly going to be rewarded with very strong cash flows in the form of dividends. We are in the eye of a storm of a bit with the trade war between China and the US so Exxaro can be a little bit more pertinent on your timing, maybe it comes down into the 140s or below 150 but certainly below 150 it is starting to scream significant fundamental values. Take a bit of a patient buy/hold and as it starts to dip to the levels that we're seeing at the moment just build your position and be patient."
Chakaduka said: “With the trade wars and domestic elections you are going to get opportunities much lower down I'll be really interested to see how a Cyril Ramaphosa maneuvers this phase in his political career and I think there could be opportunities which all of us will be happy to to pick up in the next couple of weeks.”