Stock Watch - Stock Picks — Spar and Broadcom

Deryck Janse Van Rensburg from Anchor chose The Spar Group as his stock pick of the day and Jean Pierre Verster from Protea Capital Management chose Broadcom Inc.

Janse Van Rensburg said: "Bringing it home for the first time in a while my stock pick tonight is Spar. The the SA retailers have certainly been under pressure. A lot of mixed bag of results if you just look at the big signature retail assets out there. But Spar certainly delivered very strong set of numbers in a very difficult economic environment and I think that these shades have certainly priced in a lot of the worst case scenario at this stage of the game. Again a lot of my premise is on the potential uptick in economic growth or potential turnaround from where we are at this stage. I do think that Spar certainly managed their business very well over the last five years-plus, if you just sit here and look backwards from today. So I think a big salute to management, great numbers in a very tough economic environment and certainly share have in a portfolio for the long term."

Verster said: "My pic for tonight is Broadcom, it's a semiconductor company which means it makes microchips. Now the machines to make microchips are extremely expensive which means you get long periods of overcapacity and under capacity making the industry very cyclical. That means that there are times when the companies look very cheap and times when the companies look expensive. Times when they generate a lot of cash and times when they do less so. Now Broadcom, what they've done is they've diversified into software, they bought Symantec - the antivirus company more recently IT security as well as CI technologies which is a leading provider of mainframe software. So what they've done is, that the hardware with the chips and they have the software now that they've diversify too and gives them a more stable cash profile and it diversifies their business where there's a lot of synergies these days where people say software wil