Small Talk Daily Research’s Anthony Clark said three JSE-listed mid-cap stocks stand out as offering great value – Grindrod, Curro, and Renergen.
Clark is well known for being one of South Africa’s foremost analysts for financial and industrial small and medium-cap companies.
Speaking at the recent South African Stock Picks series hosted by the Johannesburg Stock Exchange (JSE), Clark said there are few undervalued stocks with good upside.
Grindrod Limited is a port, rail, and logistics company which was founded 110 years ago by Captain John Grindrod.
Clark said Grindrod has always had a discount to its net asset value, which helped the share price increase by over 120% in 2022.
Despite the strong share price growth over the last year, he believes there is more to come.
“Management has cleaned up the structure, non-core assets have been sold, and debt has basically been extinguished,” he said.
Clark has a short-term value on Grindrod of R13.00, but he said there is the potential for the stock to go much higher.
Curro Holdings is a JSE-listed private education company offering schooling to learners from early childhood to Grade 12.
The share is down over 30% year-to-date, but a lot of that is a result of PSG unbundling its 64% stake in the company.
Interim results were up 41%, and Clark predicts strong growth in Curro’s full-year results.
He added that the company’s J-curve growth is set to kick in as debt stabilises and capital expenditure peaks in 2024 and 2025.
It will cause significant cash generation and debt reduction, allowing Curro to start paying dividends.
“I am forecasting very good earnings growth over the next two to three years, with an aggressive target price of R16.00 for Curro,” Clark said.
Renergen is an emerging integrated renewable energy producer, delivering helium and domestic natural gas.
The company’s share price is down 35% from its peak, but Clark is confident there is good growth in the stock.
The decline is partly a result of negative comments around the company after engineering problems delayed its liquid natural gas and helium operations coming on stream in mid-2022.
Following the delays, Renergen’s Virginia phase one is basically up and running, producing liquid natural gas. Helium production is also set to start soon.
Clark said he remains bullish on Renergen’s long-term prospects and maintains a buy in the company.