I am doubling down on these 5 DEEPLY UNDERVALUED JSE shares.

These 5 JSE companies are trading at very low valuations, showing positive prospects.

I have been buying these names heavily the past few weeks as I believe they are undervalued and showing good prospects for growth.
 

1. Santova Logistics

Share Price R8.10

Market Cap R1.1 billion

Why I believe it is undervalued

• PE ratio 5.55
• Stock buybacks- Santova is building the vakue per share through stock buybacks. They are not currently paying a dividend, but prefer stock buybacks. Personally, I love this. I will write an article on stock buybacks soon.
• Cash generated from operations increased by 45.5% in 6-month period ending August
• Debt to equity 5.3% which is very low & improved a lot recently
• Operating margin 45.7%
• Globally diversified (70.3% offshore earnings)
• Huge industry (Logistics & Supply chain solutions)
• New potential unlocked in the US (A-Link freight acquisition in 2022)
• ROIC 26.04% which is really high. This is one of Warren Buffets most important metrics. Return on Invested Capital
• Return on Equity 28.2%
• Santova has a lot of organic growth. They start small with new acquisitions & partnerships, then they expand and grow organically.

Bearish Arguments

• Shipping rates have come down, which could impact Santovas margins
• Difficult to deeply understand their product.
• Global economic slowdown which could lead to less demand for logistic services

2. Argent

Share Price R14.85

Market Cap R832 million

Industrial holding company owning companies like: American Shutters, Xpanda, Fluid Transfer Group, Fuel Proof, Jet Master, Castor and Ladders, Phoenix Steel & many more

Why I believe it is undervalued:

• Stock buybacks taking place
• Dividend yield 5.86%
• PE ratio 3.99
• UK prospects looking good
• Positive prospects with order backlog looking healthy
• Insider buying- The latest one being at R15 a share, for a total value of R750 000.
• Argent got rid of non-performing assets & doubled down on the cash flow generating assets.
• Trading at a discount to Net Asset Value

3. Master Drilling

Share price R13.99

Market Cap R2.1 Billion

Why I believe it is undervalued

• PE Ratio 4.79
• Big MOAT- They have a vergy large market share & fleet. It will be very difficult for new entrants to compete with them at this scale.
• Dividend yield 2.32%
• Huge product backlog
• Supply problem, not demand (Personally I love this)
• Global diversification
• Resource diversification

4. Caxton

Share Price R10.05

Market Cap R3.64

Why I believe it is undervalued

Paul Roux will cover Caxton in the near future on the FinMeup account

• Cash, Cash & more Cash- Caxton is sitting on A LOT of cash
• Low PE of 6.65
• Dividend Yield of 4.98%
• Good trading statement published last week with positive earnings growth
• The world is turning green, which also means people are moving away grom plastic. What is a great alternative for plastic packaging? Paper. Caxton is in a great position to benefit from this position
• Very limited downside risk due to their strong cash position and low valuation

5. Kaap Agri

Share price R40.50

Market Cap R3 Billion

Why I believe they are undervalued

• PE Ratio 7.3- Compared to other retailers, this is extremely cheap. Its not exactly the same, but Shoprite is trading at 21 PE, Woolies 19 PE, Pick n Pay 15.7 PE. 
• Dividend Yield 4.1%
• Insider buying- Insider have been buying non-top. Not huge amounts, but money is money & insiders have been placing their bets on their own company, which is always a positive sign.
• Attractive valuation & dividend
• Solid management with great track record
• PEG acquisition presents a lot of profitable growth going forward.
• Consistant historic revenue & earnings growth 

Disclaimer: This is not financial advice. Always do your own research. This is my personal opiniom and what I am doing with my own money.