Stock Watch - Stock picks — SA Govt Bonds and Casbuild

Rowan Williams from Nitrogen Fund Managers chose SA Govt Bonds as his stock pick of the day and Jean Pierre Verster from Protea Capital Management chose Cashbuild

Williams said: "We are still quite concerned about where stock markets are going to go from here so, it's not even a stock, we're saying South African
government bonds. They have the highest real yield in the world right now and that's not withstanding what we may see with a Moody's downgrade later in the month. These bonds are sub investment grade bonds that are yielding much lower in real terms and so structurally it seems like a very attractive proposition, 9%
nominal return with little risk as long as you hold to maturity sounds fairly appealing"

Verster said: "I'm going for Cashbuild, the shares got absolutely hammered from over R500 to around R160 and I do think that while there is pressure on the revenue line it is in the price to a large extent. The core business of distributing and selling building products I think is very defensive, people will continue to extend their homes or build on another unit in the in the backyard to rent out make some extra money. In the short term there might be pressure because of affordability but the business model and the strong balance sheet with a lot of cash on it means that they're well-positioned that, when the storm
passes I think the shares will end up looking very cheap with the benefit of hindsight."