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3 JSE Companies that could 10x in the next 10 years

July 17, 2023
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3 JSE Small Caps with HUGE potential!


These 3 companies have the potential to 10X in the next 10 years in my opinion.

What they have in common:

  1. They are operating in industries with large TAMs
  2. They are cash generative businesses with products/services that are in high demand and will continue to be.

 

1) Santova

  • Share price R7.04
  • Market Cap R967 million
  • PE 5.89
  • Share price year-to-date +38%

What I like:

  • Huge Total Addressable Market (and growing)
  • Global scalability - Current offshore earnings are 82.6% of the business.
  • Asset light & scalable
  • Incredible history of execution and growth
  • Adding new clients that is expected to have high Net Expansion Rates
  • Solid growth momentum

Latest results:

  • Revenue +40%
  • HEPS  +169%Net profit after tax +144%
  • Dirt cheap - PE of below 6, while revenues are increasing 40%, and Net Profit 144%.

 

2. Stadio

  • Share Price R3.30
  • Market Cap R2.8 Billion
  • PE 22.7
  • Share price Year-to-Date -8.3%

FinMeUp recentky posted a Stock Pick on Stadio, I would recommend going through that.

What I like:

  • Scalable business (Online part of the business)
  • Competition is not great (UNISA)
  • High & improving margins
  • Large TAM
  • Still early days, so it is basically VC on the JSE. So the potential reward is high, but so are the risks.
     

3. Capital Appreciation

  • Share Price R1.75
  • Market Cap R2.3 Billion
  • PE 13.7

What I like:

  • Sticky business model (B2B)
  • Growing market
  • New/extra innovations
  • Global opportunity
  • Business strategg allows opportunity for expansion (Partner, Innovate and Execute)
  • Strong cash position to fund further growth
  • Blue chip clients that will continue to use their services (Capitec, Nedbank, OldMutual, Experian etc)

 

Final thoughts

Expect a lot of volatility, long periods of boring movements and stagnation.

10 Baggers take time, they are also scarce.

In order have to have a 10 bagger, you must be able to hold it when it is a 3 bagger. (There is nothing wrong with taking some profits though)

Patience is key! Small Cops can do nothing for 3 years and then grow 300% in one year. It is all about focusing on the fundamentals of the actual business and not the daily share price.

Personally, I own all 3 shares. I will not sell UNLESS the fundamentals change. Lots can happen in 10 years, so it is important to keep an eye on the companies, especially as they are small caps.

Out of these 3 companies, Santova is my largest holding.

 

(Disclaimer: This is not financial advice. It is my personal opinion and where I am invested. These companies are still small, which also carries risk. Always do your own due diligence.)
 


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