Stock Watch - Stock Picks — Anglo American and Sasol
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Joseph Busha from JM Busha Investments chose Anglo American as his stock pick of the day and Gerbrand Smit from N-e-FG Fund Management chose Sasol
Busha said: "Anglo American has been hammered as resource stock and they certainly have their own issues, they had to settle their class lawsuit here in South Africa and Zambia has also issued one to say that they need to be able to pay, so from a momentum perspective you might be able to get it back again, possibly in the very short term but in terms of their sales year to date I think they almost half way there at about 7%, so there is potential but again I think it is a very short term momentum driven strategy."
Smit said: "I'm going against the stream here so it's not for the widows and orphans at the moment, just if you do a matchbook calculation on what's Sasol was worth (the old businesses) if chemical process do recover a little bit, we used to say that there is about R40 or R50 a share in it at a 10PE it should be R500 a share. It's market cap at the moment is R150 billion, it's less than what the whole Louisiana project cost in the States. All these delays are normal, I don't think it's a big thing although the cost overrun was huge and they were right to get hammered for that but to write off half of a company for an extra $3 billion is also not totally correct so, from a calculation of what the business parts are worth I think they are certainly well under priced at the moment."
Busha said: "Anglo American has been hammered as resource stock and they certainly have their own issues, they had to settle their class lawsuit here in South Africa and Zambia has also issued one to say that they need to be able to pay, so from a momentum perspective you might be able to get it back again, possibly in the very short term but in terms of their sales year to date I think they almost half way there at about 7%, so there is potential but again I think it is a very short term momentum driven strategy."
Smit said: "I'm going against the stream here so it's not for the widows and orphans at the moment, just if you do a matchbook calculation on what's Sasol was worth (the old businesses) if chemical process do recover a little bit, we used to say that there is about R40 or R50 a share in it at a 10PE it should be R500 a share. It's market cap at the moment is R150 billion, it's less than what the whole Louisiana project cost in the States. All these delays are normal, I don't think it's a big thing although the cost overrun was huge and they were right to get hammered for that but to write off half of a company for an extra $3 billion is also not totally correct so, from a calculation of what the business parts are worth I think they are certainly well under priced at the moment."