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JSE Top 40’s cheapest companies revealed

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A Daily Investor analysis revealed that Exxaro Resources, Sasol, and Impala Platinum have the lowest price-to-earnings ratios of all JSE Top 40 companies.

Trying to find undervalued companies is the foundation of value investing popularised by investors like Benjamin Graham and Warren Buffett.

Value investors identify and buy quality companies at a good price and hold onto these stocks for the long term.

Many value investors combine well-established ratios to better understand a company’s financials, earnings, and stock valuation.

Daily Investor picked two popular measures to establish whether a company is under or overvalued – price-to-earnings and price-to-sales ratio.

  • The price-to-earnings ratio is the relationship between a company’s stock price and earnings per share.
  • The price-to-sales ratio measures the value investors place on the company compared to the business’s total revenue.

We applied these ratios to the 40 largest companies listed on the Johannesburg Stock Exchange (JSE), also known as the JSE Top 40.

It revealed that Exxaro Resources has the lowest price-to-earnings ratio, followed by Sasol and Impala Platinum.

The companies with the highest price-to-earnings ratios are Richemont, Mediclinic, and Clicks.

The JSE Top 40 companies with the lowest price-to-sales ratios are Glencore, Richemont, and Sasol. The ones with the highest price-to-sales ratios are Nepi Rockcastle, Reinet, and Prosus.

These two ratios should not be used in isolation but rather as part of a comprehensive financial analysis of a company.

Other factors like the company’s growth, prospects, management team, and operating environment are all important factors to consider along with these ratios.

The table below provides an overview of the P/E and P/S ratios of the JSE Top 40 companies.

CompanyP/E ratioP/S ratio
Exxaro Resources Limited (XJSE:EXX)3.120.93
SASOL LIMITED (XJSE:SOL)3.780.53
Impala Platinum Holdings Limited (XJSE:IMP)4.761.59
GLENCORE PLC (XJSE:GLN)4.810.32
Northam Platinum Holdings Limited (XJSE:NPH)5.501.72
BHP GROUP LIMITED (XJSE:BHG)5.662.83
MONDI PLC (XJSE:MNP)5.720.93
Reinet Investments SCA (XJSE:RNI)6.256.27
SOUTH32 LIMITED (XJSE:S32)6.341.62
REMGRO LIMITED (XJSE:REM)6.580.96
SIBANYE STILLWATER LIMITED (XJSE:SSW)6.870.91
Anglo American Platinum Limited (XJSE:AMS)7.001.84
INVESTEC LIMITED (XJSE:INL)7.032.49
Nedbank Group Limited (XJSE:NED)7.341.76
STANDARD BANK GROUP LIMITED (XJSE:SBKP)7.791.73
ANGLO AMERICAN PLC (XJSE:AGL)7.961.20
ABSA GROUP LIMITED (XJSE:ABG)8.021.39
Nepi Rockcastle NV (XJSE:NRP)8.736.16
Sanlam Limited (XJSE:SLM)9.651.02
KUMBA IRON ORE LIMITED (XJSE:KIO)9.802.24
Aspen Pharmacare Holdings Limited (XJSE:APN)9.832.10
PEPKOR HOLDINGS LIMITED (XJSE:PPH)10.120.76
FirstRand Bank Limited (XJSE:FAETNQ)10.172.90
BRITISH AMERICAN TOBACCO P.L.C. (XJSE:BTI)10.902.64
MTN GROUP LIMITED (XJSE:MTN)11.311.06
NASPERS LIMITED (XJSE:NPN)12.635.06
WOOLWORTHS HOLDINGS LIMITED (XJSE:WHL)12.870.74
VODACOM GROUP LIMITED (XJSE:VOD)12.891.98
The Bidvest Group Limited (XJSE:BVT)15.630.79
ANGLOGOLD ASHANTI LTD (XJSE:ANG)17.192.93
DISCOVERY LIMITED (XJSE:DSBP)18.321.41
CAPITEC BANK HOLDINGS LIMITED (XJSE:CPI)19.016.08
SHOPRITE HOLDINGS LIMITED (XJSE:SHP)19.080.59
Prosus NV (XJSE:PRX)20.6916.34
BID CORPORATION LIMITED (XJSE:BID)23.020.78
Gold Fields Limited (XJSE:GFI)23.452.70
Anheuser-Busch Inbev SA (XJSE:ANH)24.652.51
CLICKS GROUP LIMITED (XJSE:CLS)24.921.61
MEDICLINIC INTERNATIONAL PLC (XJSE:MEI)25.581.28
Compagnie Financiere Richemont SA (XJSE:CFRO)40.804.86

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