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MyMoney Online

6 best long-term, affordable local shares to buy, right now

28 April 2020 4:37 PM

Chantal Marx (FNB Wealth and Investments) says these six South African companies are looking resilient and attractively priced.

Investors should consider that some companies will get through the Covid-19 crisis relatively unscathed, says Chantal Marx, Head of Equity Research at FNB Wealth and Investments.

Right now, there are several companies with share prices that look very attractive, especially for investors who take a longish view.

Clement Manyathela asked Marx to elaborate.

pixabay.com

Marx’s view on Naspers:

One might not think Naspers is an affordable stock, but relative to its underlying value it trades at a very deep discount. It is, by far, our first and favourite pick… Tencent’s WeChat has over two billion users: it’s growing from strength to strength. It’s expected to do well in lockdown conditions because of increased screen time…

Chantal Marx, Head of Equity Research - FNB Wealth and Investments

Marx’s view on British American Tobacco:

A tobacco company in South Africa might not seem like a good idea right now… but it’s not the case globally… In Italy in February, cigarette sales were flat year-on-year – even in difficult times, people don’t give up on cigarettes… We expect them to be able to push through price increases… We expect them to deleverage… A more favourable regulatory environment in the US… The company is extremely cash generative and it’s best-in-class in terms of tobacco companies worldwide.

Chantal Marx, Head of Equity Research - FNB Wealth and Investments

Marx’s view on Bidvest:

It’s very diversified… offices will open again… They’re not overextended… They bought a very big business in the UK that specialises in hygiene… There might be near-term pressure, but if you’re a long-term investor it is still a very safe space to place your money.

Chantal Marx, Head of Equity Research - FNB Wealth and Investments

Marx’s view on Spar:

We don’t expect grocery wholesale to turn down too much. Even in the worst of times in South Africa, food sales have never gone backwards… We like the food retailers, and Spar would be our preferred pick…

Chantal Marx, Head of Equity Research - FNB Wealth and Investments

Marx’s view on Sanlam:

…Even if there were two catastrophic events on top of Covid-19 they will still have enough money to maintain solvency ratios… They will be able to pay out claims. It just tells you what high-quality that company is and how much it has in the bank… They way they invest their shareholder portfolio – they’ve been very smart; they’ve lost almost nothing during all this major market volatility to the end of February.

Chantal Marx, Head of Equity Research - FNB Wealth and Investments

Marx’s view on BHP Billiton:

Within the resources space, BHP Billiton remains our top pick. A very strong balance sheet. It’s very low on the cost curve and well-diversified… We think it will trade through this period quite well.

Chantal Marx, Head of Equity Research - FNB Wealth and Investments

Marx’s view on Sasol:

Oil prices are not sustainable at these levels. The market was laughing at Sasol when they hedged their oil exposure at $32 per barrel… It ended up quite a good thing… They’ll probably get through this period… Will I bet on short-term price moves? Absolutely not! The share price is so volatile…

Chantal Marx, Head of Equity Research - FNB Wealth and Investments

For more detail, listen to the interview in the audio below.


28 April 2020 4:37 PM

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