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Why Sasol is a great investment (it’s because of, NOT despite, the oil price)

(Also read the following related article: “Buy Sasol shares (despite very cheap oil)– market analyst”)

Oil is cheap and nobody, so it seems, wants to hold Sasol shares right now. After peaking at over R600 a share it now trades at around R440.

“I like it! It’s the market’s discomfort that’ll get you outsized returns,” says Lentus Asset Management Chief Investment Officer Nic Norman-Smith.

Ask yourself what the market hasn’t: Will oil stay cheap forever?

“Almost nobody predicted the large, sudden drop in the oil price. Yet now everybody is certain that it’ll stay at $60 for the next 20 years!”

Nobody really knows what the oil price is going to do, but the reality is a lot of the extra supply that has come on the market, such as shale oil and the Canadian oil sands, is expensive to produce.

“Oil is not about to disappear!” says Norman-Smith. “The electric car won’t become ubiquitous overnight.”

One of the cheapest oil firms on Earth

Sasol is one of the cheapest oil companies in the world. “The crashing oil price has hurt the Sasol share price a lot more than many of the global supermajors (BP, Chevron, ExxonMobil, Shell, Total)."

If you believe humanity will still be consuming oil for a while then Sasol is one of the cheapest entry points into this vital commodity.

Norman-Smith is also buying Grindrod and Anglo American. Listen to the audio to learn why.

(Also read the following related article: “Buy Sasol shares (despite very cheap oil)– market analyst”)


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