Welcome to the March edition of our monthly stock analysis focusing on the dynamic trends and performances of local equities. As we enter the third month of the year, investors are closely monitoring the evolving market, seeking to capitalise on emerging opportunities and mitigate potential risks.
In this article, we'll cover the latest movements on the Johannesburg Stock Exchange (JSE), examine sector performances, and analyse the key drivers behind the growth of the following top three stocks:
African Rainbow Capital (AIL) is an investment firm with tremendous hidden value. Through its many subsidiaries, the company is invested in financial services, health care, insurance, property, energy, agriculture and telecommunications. Share prices have been trading between R4.85 and R8.00 since January 2022, despite the total asset growing 15.85% to R15.39 billion at the end of June 2023. The book value per share is currently at R11.44. Meaning, theoretically, there is a potential R6.59 per share value to be unlocked. The share has a potential upside of 24% to R6.18.
Clothing and footwear retailers are ramping up local production and finding alternative sea ports and air freight to mitigate the effects of Transnet. The state owned logistics company failed to sufficiently invest in equipment and maintenance, which has caused congestion at the Durban and Richards Bay ports. The Foschini Group (TFG) fared better in its industry because it has been expanding its local factories over the past seven years and had enough stock for the 2023 festive season. The share price has a potential upside of 16.5% to R127.80. However, investors should be wary of persistent load shedding which could slow down local production.
Stadio Holdings Ltd (SDO) invests in the growth and development of higher education institutions. It owns STADIO, Milpark and AFDA, which offer undergraduate and postgraduate programmes that can be delivered long-distance, in person, and with a blended learning model. It is a subsidiary of Curro Holdings limited which is a provider of pre-school and school based education. The company has been paying dividends for the last two years with the last payout April 2022, with a dividend yield of 1.81%. Net income was R165.64 billion, up 34.41% in 2021 and total revenue coming in 10.52% higher at R1.21 billion. The share price has been enjoying a steady uptick and has a 13.43% potential upside to reach R5.60 per share.
Stadio is yet to release its December 2023 report.
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