Stocks for volatile times
Jan 25 2010 14:08
Shaun Harris
Durban - A heady mix of huge government deficits in Western and some Asian countries, ballooning liquidity and investor exuberance has investment implications in South Africa.
Adrian Saville, chief investment officer at Cannon Asset Managers, has pinpointed some stocks on the JSE that could benefit.
As currencies in many foreign countries come under pressure, investors will be looking for non-cash assets, he said.
"Gold is a notable case in point. But the gold market is not yet displaying signs of a bubble [which Saville believes will form in assets overseas].
"Gold could rise even further - even substantially so - but other commodities such as oil and platinum, which have a consumption use and not just a hoarding function, suggest a more sensible and less emotive set of assets in which to invest."
He said platinum shares worth revisiting are Impala Platinum and Northam Platinum "as the best points of entry into that market".
Said Saville: "For oil, Sasol is an interesting play, with the oil price comfortably above $70/barrel. If there is any rand weakness, it will serve to improve the outlook for all three of these companies."
Saville is also upbeat on future prospects for South African-based banks.
"The banks have been conservative in their accounting over the recession and are likely to emerge strongly from the downturn, possibly during the next six months. The bank stocks that stand out are Investec and Nedbank, as well as the smaller bank, Sasfin."
Higher consumption would benefit a group like Bidvest, with its varied interests ranging from motor retailing to consumer discretionary spending. "In addition, its exposure to the hospitality industry could benefit (albeit temporarily) from the 2010 Fifa World Cup."
He said investors should also consider consumer cyclical stocks like furniture retailer Lewis Group and clothing and jewellery retailer Foschini Group as opportunities to benefit from the consumer recovery.
- Fin24.com |