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My Top 5 2023 JSE Stock Picks

July 17, 2023
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Here are my Top 5 JSE stock picks for 2023.

In 2023, the focus will be on cash flow and profits. This year, I will be making two rounds of stock picks on the JSE with a concentrated and diversified approach.

For the concentrated picks (top 5), I have chosen Santova, Karooooo, Argent, Kaap Agri, and Masterdrilling.

Ill cover these companies in more detail as the year goes on. 
Important aspects that I will be touching on:        Return on invested capital, return of equity, return on assets, insider ownership, debt levels, global opportunities, revenue growth, cash flows & profits, industries, outlook, buybacks and more. Stay tuned.

Disclaimer: I own all of these companies in my personal portfolio, so I an biased as well. Do not take this as financial advice & always do your own research.


Santova

  • Santova has a share price of R7.99, trading at a PE ratio of 5.55. 
  • The company is conducting buybacks and has a strong track record of successful global operations in a growing industry. The low valuation may be due to the complexity of the business, but the recent positive trading update and expansion plans make it a good pick for this year. 
  • There is some concern about a potential slowdown in trade due to recession worries, but Im not too worried considering their valuation & execution abities.


Karooooo

  • Karooooo has a share price of R394, a PE ratio of 22.18, and a dividend yield of 2.55%.
  • The business has strong margins, international growth potential, and recurring revenue, as well as high insider ownership and an attractive valuation. 
  • The main concern is low liquidity. 
  • Asia and Europe also present great international opportunities for Karooooo. I believe we will start seeing proper momentum in these areas this year.

 

Argent

  • Argent has a share price of R15.48, a PE ratio of 4.22, and a dividend yield of 5.84%. 
    While it is not a tech company and not a typical choice for me, the current valuation and bullish outlook, as well as the buybacks being conducted, make it a good pick in my opinion. I generally prefer buybacks over dividends, especially when the share is undervalued. 
  • Argent is focusing and capatalising on their great & cash generating businesses, which is why we have been seeing the good recent growth.

 

Kaap Agri

  • Kaap Agri has a share price of R41.86, a PE ratio of 8.10, and a dividend yield of 4.1%.
  • The company has a competent management team that has consistently grown revenues and profits, and I am also interested in their fuel business (PEG) that they acquired. 
  • The company is considered to be of high quality and is trading at a reasonable valuation. However, some parts of their business are cyclical in nature, but Im not too concerned about this. 

 

Master Drilling

  • Master Drilling has a share price of R14.24, a PE ratio of 5.27, and a dividend yield of 2.24%.
  • The company has made significant investments in recent years and has a large backlog, indicating strong demand.
  • They are geographically and commodity diversified. They have a moat, as their fleet is highly advanced. 
  • MDIs share price is also highly illiquid, which is not great, but also presents opportunities for retail investors at lower prices. I also expect a juicy dividend in their next set of results.


Next week, Ill post my other 5 picks for my diversified picks. Make sure you are subscribed to the FinMeUp YouTube channel for more insights & weekly updates. https://youtube.com/@FinMeUp

Remember to join the FinMeUp 2023 stock pick challenge. https://www.finmeup.co.za/newsletter/stock-pick

Invest safe & goodluck to 2023!

 


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