Anchor picks 5 JSE stocks for 2025
Anchor has picked 6 JSE-listed shares for 2025 – ADvTECH, Afrimat, Naspers/Prosus, Renergen, and Southern Sun.
The Anchor investment team said after several lean and frustrating years for South African investors, 2024 was when the stars aligned.
It said the JSE entered 2024 with valuations close to historic lows relative to history for domestically focused companies.
“Local equities were certainly positioned well for any hint of good news,” the Anchor analysts said.
The pivotal event was South Africa’s May national and provincial elections, from which the Government of National Unity (GNU) emerged.
This was a much better outcome than many had feared and set off a strong recovery among South African shares.
Among the miners, except for gold shares, which tracked the rising gold price, 2024 has been a forgettable year.
The results for South Africa’s large component of rand hedge shares, which is geared more toward what is happening elsewhere in the world, were mixed.
Rand strength was a headwind for all of them after the formation of the new government of national unity.
However, company-specific factors, such as global luxury goods sales having a particularly challenging year, which impacted Richemont, also played a part.
The JSE is set to enter 2025 with valuations of domestic companies closer to their long-term average in many cases after the post-GNU rally.
Investors have bid up shares in anticipation that positive factors will deliver tailwinds for these companies. These positive factors include:
- An end to load-shedding.
- Greater confidence in the future after the GNU formation.
- Lower interest rates.
“So far, confirmation that this has begun to materialise in the commentary from companies that have reported over recent weeks has been decidedly patchy,” the Anchor team said.
Despite some lacklustre performance, the outlooks, by and large, remain cautiously optimistic.
They added that what happens offshore from a market perspective has been and will remain a critical driver of the local market.
Anchor’s stock picks for 2025 include a few old favourites with which they are sticking, including Afrimat and Naspers/Prosus.
They also included two companies benefiting from the improving domestic consumer outlook: Southern Sun and ADvTECH.
It made another bold call that 2025 will finally be the year that Renergen delivers on its long-delayed promises.
ADvTECH – Stephan Erasmus
ADvTECH has positioned itself as one of South Africa’s more compelling private education providers, gaining recognition and investor confidence.
Its share price advances this year reflect growing trust in the company’s strategy and its ability to deliver steady improvement in both academic outcomes and financial returns.
The group has navigated a challenging domestic economic environment with a measured approach, securing trust from parents, students, and investors.
As the spotlight shifts towards mid-sized opportunities on the JSE, ADvTECH’s proven ability to adapt to demand, invest in quality, and expand thoughtfully makes it an education stock worth watching in 2025.
Afrimat – Mike Gresty
Anchor has long favoured Afrimat, frequently featuring among its local stock picks, including for 2024.
Although the share did reasonably in absolute terms, it did not stand out in what was a good year for South African equities.
Afrimat’s H2 2025 performance should show sequential improvement from 1H, thanks to progress on turning around the Lafarge operations and far better performance from domestic iron ore post its new agreement with ArcelorMittal.
With Lafarge’s turnaround in full swing and a low base for most of its other operations, Afrimat is well set for strong growth in years to come.
Naspers/Prosus – Mike Gresty
Another stock pick from last year that they have decided to stick with for 2025 is Naspers/Prosus.
The various pillars that supported their investment thesis then are essentially unchanged, except that they have a further year of execution.
There is limited fundamental justification for the discount gap to narrow further, but one needs to keep in mind that Naspers will continue selling Prosus shares to raise cash for its buybacks.
What could change going forward, particularly if their thesis that Prosus’s eCommerce division will increasingly decouple the investment case from that of Tencent, should begin to attract the interest of European investors.
This would be an important source of new demand for Prosus shares, which was not seen before.
“Thus, if we were forced to choose only one of the two, it would be Prosus, but we would rather own both until there is clearer evidence of European demand for Prosus,” they said.
Renergen – Stephan Erasmus
Renergen, a name that may not yet be well-known in the global energy landscape, is positioning itself to play an essential role in two key areas: liquefied natural gas (LNG) and helium.
With unique assets and ambitious plans, Renergen may thrive as the world increasingly moves to cleaner energy solutions and grapples with helium shortages.
Despite this potential, the company must overcome immediate challenges that require careful management.
The company has interesting potential, with both LNG and helium production making it a unique player in the global energy market.
For investors willing to take a risk, Renergen is an interesting option. Significant upcoming events, like the completion of Phase-1 production and a potential Nasdaq listing, mean it deserves attention in 2025.
Southern Sun – Liam Hechter
Fewer industries were harder hit by the Covid-19 pandemic than travel and leisure, and for Southern African hotel operator Southern Sun, the timing could not have been worse.
It entered the pandemic fresh off the demerger between itself and local gaming operator Tsogo Sun Holdings in 2019.
The newly consolidated balance sheet was vulnerable to a cyclical downturn, let alone a full-scale government-mandated shutdown of its operations with no apparent end in sight.
But if ever there was an example of a management team making the best of a tricky situation, it would be the example set at Southern Sun under the leadership of CEO Marcel von Aulock.
“Trading on a trailing 15x P/E and, on our estimates, a 12-month forward 11.5x P/E, the group will likely be debt-free and ready to pay out healthy dividends in one year,” Anchor said.
“We believe SSU shares would be a good addition to this year’s Christmas stocking.”
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