Gary Booysen’s top JSE stock picks
Gary Booysen, the founder of Rand Swiss, selected three South African companies – Stadio, Richemont, and Glencore– as his top JSE stock picks.
Booysen leads Rand Swiss as its founder and head portfolio manager, focusing on custom portfolio construction, stockbroking, and trade execution. He is also a frequent commentator on investment shows and news segments.
At a recent JSE stock picks event, Booysen picked stocks to represent a portfolio view “because I’m a portfolio manager rather than an analyst”.
His stock picks reflect the local opportunities on the JSE that can’t easily be accessed globally.
Firstly, he chose Stadio, a private tertiary education company with strong exposure to the South African market, making it a unique local investment.
The company started as a subsidiary of Curro but was unbundled and listed on the JSE in 2017.
Although Stadio is not as established as Booysen’s other two stock picks, it has grown impressively in the last few years and now has over 50,000 students across 15 campuses in the country.
While Stadio may be a newer entrant on the market, Booysen’s other two stock picks are much larger. With market caps valued at over R1 trillion, they are some of the biggest shares on the JSE.
Glencore is one of the most exciting commodity companies on the JSE, Booysen said. As a key player in the global commodities market, it’s a “must-have” for local portfolios.
Founded in 1974, it is a Swiss multinational commodity trading and mining company and currently has a market cap of 1.16 trillion.
Finally, he went with Richemont, a luxury goods company which he said provides great international exposure while being a solid rand hedge.
Compagnie Financière Richemont S.A. (Richemont), is a Switzerland-based luxury goods holding company founded in 1988 by South African businessman Johann Rupert.
Below are the stocks Booysen chose.
Stadio
For his first stick pick, Booysen chose Stadio, a private, tertiary education institution.
Compared to competitors like Curro and AdvTech, it’s the smaller player, with a market cap of R5.07 billion.
Stadio focuses on tertiary education and currently has over 50,000 students, with 80%, about 40,000, studying online.
The challenges Curro and AdvTech face, like emigration which is reducing student numbers, don’t impact Stadio as much because of its online courses.
Booysen explained that while Curro loses about 3% of students due to emigration, Stadio avoids that issue entirely.
They’re also expanding, with plans for a new campus in Durban, which will open in the second half of the year and add space for another 1,000 students.
According to their CEO, they aim to have 56,000 students by 2026, but they’re way already ahead of schedule with only 10,000 more to go.
While public tertiary education institutions have been facing challenges, Stadio has experienced strong growth.
Stadio is stepping in to meet the increasing need for private education, and it’s doing well. It’s also relatively inexpensive compared to its competitors, considering the growth it’s achieving.
Richemont
Next, Booysen picked Richemont, one of the biggest companies on the JSE, with a market cap of R1.35 trillion.
The company is a great rand hedge, meaning that if the rand weakens over the next few years that will further boost returns.
The company also offers investors the opportunity to access it locally while benefiting from its massive international exposure.
On the Swiss exchange, it’s trading at just under 120 francs, and Booysen said he has a target of 150 francs – offering a potential 30% upside. Many major institutions and banks also see it as undervalued.
Richemont primarily operates in hard luxury, which is often made from expensive materials such as gold, platinum, diamonds, and other precious gemstones. These include items like high-end watches and jewellery.
Their soft luxury goods, like apparel, are a smaller part of the business and aren’t performing as well, but they don’t have as much impact.
What makes Richemont valuable is its strong brand and moat – which refers to a business’s ability to maintain competitive advantages in order to protect its long-term profits and market share.
In other words, something that’s unique about a business that can’t be reproduced easily. For Richemont, this comes from the brand’s heritage and prestige, brand loyalty, global reach, and the high barriers to entry in the luxury goods market.
Some of Richemont’s brands have a history that stretches over 100 years, which is something that easily be duplicated by their competitors.
The only risk is their UK business, Net-a-Porter, which is up for sale, but fortunately, it’s already been discontinued in operations. Overall, it’s a solid investment worth adding to a portfolio.
Glencore
Lastly, Booysen highlighted Glencore, a Swiss-based commodity giant with primary listings on the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange.
According to Booysen, the South African exchange features some of the world’s most exciting commodity stocks, and “Glencore is definitely up there.”
The company stands out as one of the most diversified players in the global commodity sector. Although commodity stocks tend to be volatile, they offer non-correlated exposure in a portfolio, making them a valuable addition for investors seeking diversification.
In the commodity market, where products are undifferentiated, the key to success is producing at the lowest possible cost.
Glencore excels in this area, particularly in zinc and nickel production, where it boasts strong cost efficiency.
What sets Glencore apart from competitors like BHP and Rio Tinto is its marketing division, which handles the physical distribution, logistics, and sales of metals—even on behalf of other companies.
This gives Glencore a unique “semi-moat,” an unusual advantage in the commodity sector.
Despite being down 17-18% year-to-date due to the cyclical nature of the industry, Glencore remains a solid long-term investment.
It’s not a stock for quick gains but is ideal for investors looking to add non-correlated assets to their portfolios. When commodity prices rise, Glencore is well-positioned to benefit.
Unlike other large commodity companies, Glencore has taken a conservative approach to expansion.
During the recent commodity price spikes following the Ukraine-Russia conflict, it avoided over-investing, which is viewed as a strategic advantage.
Currently trading around £370 on the London Stock Exchange, Glencore has a target price of £500. Major banks are also backing the stock, and Booysen notes that it’s trading at a 30% discount, offering substantial upside potential.
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