1. HORIZON: 0 - 5 months (Medium-Term)
2. FROM: 27 November 2025 | UNTIL: 27 April 2026
3. MANAGEMENT ASSESSMENT: 25% growth
4. RECOMMENDATION: BUY
5. PROJECTION BASED ON: R15 000
● Potential entry: Entry can be initiated once the share price closes above R46.40.
● Risk management: The stop-loss level at R40.50, an area that represents a roughly 12.70% drop from the entry price.
● Profit target: The next key resistance is near R60, which aligns with a 25% move from the current level to trade at R58.
Strong Financial Performance and Growth
The company shows strong and consistent growth, with revenue increasing 13.1% and core headline earnings growing 15% in its latest financial year. This proves its ability to scale its operations profitably and increase market share.
Aggressive and Successful Expansion Strategy
WBC is rapidly expanding its national footprint, adding 23 new buying pods in the last year alone to reach 106 locations. This physical expansion directly fuels growth in vehicle volumes, with a record 179 006 cars sold in FY2025, showing an effective path to future growth.
Commitment to Shareholder Returns
Despite being in a high-growth phase, the company is already focused on returning value to shareholders. It declared a total dividend of R0.60 per share for the year, signalling a strong, cash-generative business model and a commitment to providing investors with both capital growth and income.
The technical setup for We Buy Cars suggests that the recent corrective phase may be complete, with several indicators pointing to a potential resumption of the uptrend.
● Successful test of key support:
After reaching a high of R60.85, the share price has retraced and successfully tested the support zone around R48. This level is significant as it corresponds to a previous high and a successful retest of a prior resistance level, as new support is a classic bullish signal.
● Imminent volatility expansion
The Bollinger Bands (BB) have contracted, which indicates a period of consolidation and decreasing volatility. This condition often precedes a significant price expansion, and given the other bullish signals, it suggests a potential breakout to the upside is becoming more likely.
● Bullish momentum shift
The relative strength index (RSI) has crossed back up from oversold territory. This is a bullish momentum signal, suggesting that the recent selling pressure has been exhausted and that buyers are beginning to regain control of the short-term trend.
● The rise of new budget-friendly cars
The South African market is seeing an increase in new, affordable cars from Chinese brands. These vehicles are priced so competitively that they often cost the same as a popular, several-year-old used car. This directly challenges WBC’s business model, as customers can now choose a brand-new car with a full warranty for the price of a used one, forcing WBC to cut its own prices and hurt its profitability.
● Economic slowdown and consumer strain
Both the South African and global economies are showing signs of slowing down. In tough economic times, households have less disposable income and are more likely to delay large purchases like cars. This reduces the total number of potential buyers in the market, which could lead to lower sales volumes for WBC and make it harder for the company to grow.
SOURCES
WeBuyCars set to shoot the lights out – but there is a catch
WeBuyCars faces a new enemy in South Africa
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** This article was prepared by BROKSTOCK analyst Maboko Seabi
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