Given the turmoil brought about by elections and geopolitical uncertainty, investors picking stocks for 2024 should prioritise keeping their portfolios protected against the South African economy.
This is the view of independent JSE equity analyst Anthony Clark, who outlined his top 9 stock picks for 2024 in a radio interview with Classic Business.
Clark has been an investor and analyst for over three decades, specialising in small- to mid-cap industrial, agricultural and food stocks.
He was recently rated as the best analyst by the Financial Mail for financial and industrial small and medium market cap companies.
Since arriving from the UK in 1996, he’s worked for Standard Bank Equities, Genbel Securities, Nedbank Securities, Barnard Jacobs Mellet, and also spent some time at BEE investment business Vunani Securities.
For the past five years, he’s been independent as the head of Small Talk Daily Research and has consistently been rated in the top five small- and mid-cap analysts by the Financial Mail since 2009.
Clark stated that he recommends stocks for 2024 on the basis of their robustness against political uncertainty.
In particular, geopolitical tension in Russia, Ukraine, the Middle East, Taiwan and China, as well as the general elections. The government may inflict shocks on their own economy in their struggle to stay in power.
“My job this year as an analyst was for capital preservation and to try to choose quality, liquid stocks which would enable my clients to sleep at night and hopefully outperform the wider market,” said Clark.
Clark’s top 9 stocks for 2024 include Afrimat, Argent Industrial, Astral Foods, Curro Holdings, KAL Group, Novus Holdings, Premier Foods, Libstar and Reinet Investments.
Here is an overview of some of Clark’s favourite shares in 2024.
The smallest company on Clark’s list, Argent Industrial, is a South Africa-based holding company with a market capitalization of R938.93 million.
With shares trading around R17.25, it is up significantly above the small-cap index.
According to Clark, the company maintains unusually stable, strong growth for its relatively small size.
“Argent Industrial is one of the only small-cap companies which has shown 12 consecutive periods of earnings growth,” Clark said.
Notably, Argent is a rand hedge, protecting investors from shocks to the local South African economy.
“On a three or four-year perspective, it is one of the best performing small caps on the JSE, which has mostly gone unnoticed by the larger institutions, much to their chagrin,” said Clark.
With a market capitalization of R6.68 billion, Curro Holdings is a larger mid-cap.
Curro Holdings is an independent schooling network that offers parents and students an alternative to state-owned educational institutions.
Clark states that the decline of the state-run tertiary and secondary education sector is ushering in private education companies.
Curro was the best-performing private education company in the private education sector last year.
Novus Holdings is a print production and manufacturing company based in South Africa.
The company has a market capitalisation of R1.65 billion and sits on R621 million in cash, with a net asset value of R7.20.
Novus gained some attention when, in 2022, the company bought Pearson, a leading educational courseware company.
With a market capitalisation of R8.15 billion, Premier Group owns some of South Africa’s leading food brands, including Blue Ribbon, Snowflake and Manhattan.
The company derives 85 – 88% of its profit from baking bread, a relatively inelastic good in South Africa.
According to Clark, most affordable food basics like bread are important products in a time when there is so much pressure on consumers.
Premier was first listed in March 2023 and has since experienced strong growth.
Recently, the cost of both wheat and fuel, the company’s most important imports, have improved. As a result, Premier’s stock has risen in the past five weeks.