Sithembile Bopela’s top three stock picks
Sithembile Bopela picked Coronation, TFG, and Eli Lilly as her top three stock picks at the JSE’s most recent SA Stock Picks event.
Bopela works as an investment research analyst specialising in stock market analysis at FNB Wealth and Investments.
Prior to her current role at FNB, Bopela worked at Ashburton Investments and has around eight years of experience in the industry under her belt.
She has also contributed to various business programmes, such as BusinessDay TV, Classic Business, and Newzroom Afrika, often presenting their market reports.
She holds an Honours Degree in finance from the University of KwaZulu-Natal.
Her top three stock picks at the JSE’s latest event were Coronation Fund Managers, TFG, and Eli Lilly.
Bopela explained that all of her top picks are well-diversified in terms of what the businesses themselves choose to invest in, the range of products they offer, and across regions, with all of them having an international presence in some way.
This is because she firmly believes that a well-diversified portfolio is a good investment strategy and tries to focus on this factor when choosing stocks.
Therefore, her three stock picks are also very different from each other, covering a variety of industries, sectors, and regions.
Coronation is in the finance and asset management industry and is headquartered in Cape Town, with offices in London, Dublin, Johannesburg, Durban, Pretoria, and Namibia.
TFG is one of South Africa’s most well-known retailers with a wide variety of brands in its portfolio, including some UK brands.
Eli Lilly is an American company in the pharmaceutical space that is set to benefit greatly from the worldwide rise in demand for diabtetes and weight-loss medications.
Coronation Fund Managers
Bopela explained that Coronation Fund Managers has a strong market share in South Africa and that it is one of very few “pure play” fund managers.
By this she meant that there are very few companies in South Africa that are purely fund managers.
So, the company does not have a lot of competition as one of the largest asset managers in South Africa.
Additionally, Bopela said that asset managers’ results are usually in line with market cycles.
This means that while the market can be volatile, especially given the difficult geo-politcal environment, improvements in the macroeconomic sphere will positively impact equities and other risk assets.
While South African consumers remain under pressure, she said that a better macroeconomic outlook, will improve savings and investment dynamics.
Furthermore, it will also lead to fewer investment withdrawals.
Additionally, she pointed out that Coronation has a strong dividend yield for income seeking investors.
Coronation upped its gross total dividend per share by 243% to 566 cents, up from 165 cents the previous year.
The asset manager’s revenue was up 7% to R3.91 billion, while profit for the year wasup 245% to R2.21 billion.
TFG
Bopela praised TFG for being a very well-diversified company.
She particularly pointed out that the company targets a large variety of Living Standards Measure categories with its wide range of products and services.
TFG is a retailer and financial services provider that owns beloved brands like @home, Jet, American Swiss, Sportscene, and Total Sports and has operations in Africa, the UK and Australia.
TFG recorded a strong performance in the last three months of 2024, offsetting a poor performance in the first two quarters of its financial year.
Bopela said that TFG is a market leader thanks to its competitive edge, which is based on its local manufacturing capabilities, which allow the company to respond quickly to changes in demand.
Online sales now contribute 11.3% to the TFG’s total sales and are driven by its Bash eCommerce platform.
Additionally, Bash is the country’s number one eCommerce site despite competition from Temu and Shein.
Furthermore, improvements in the macroeconomic environment will lead to improved household finances. This is also positive for TFG, which has a large credit book.
This will improve the quality of the credit book and credit retention, said Bopela.
Eli Lilly
Bopela also picked the American drug manufacturer Eli Lilly as an offshore diversification option.
This company is also well-diversified, with a main focus on developing and manufacturing pharmaceuticals, she said.
The company has manufacturing plants globally, and it manufactures diabetes and weight loss medication.
Additionally, the company also has a focus on cancer, immunology and cardiovascular treatment.
However, the last few years have seen demand for weight loss and diabetes medication increase, which has outstripped supply and has boosted its desirability as a stock.
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