In my interview last week with value investing guru John Biccard of Ninety One, he suggested it was time to stock up on the JSE’s “Lucky Sevens”, a strategy which served him really well at the beginning of the previous cycle. His definition of these stock market equivalents of a slots jackpot: a share with a 7% dividend yield and a PE (price:earnings) ratio of 7.
Biccard shared five Lucky Sevens with us: Reunert, AECI, Caxton, Lewis and Truworths, whose prices are now “just too cheap.” I’m busy doing my homework on them ahead of the next BizNews Share Portfolio webinar, a week tomorrow. If you haven’t yet booked, register by clicking here and join me at noon on the 27th for this Premium-member-only event.
While Biccard’s picks are all industrial stocks, I’m keen to have a wider look at some in other sectors with equally appealing ratios. On my homework list is Momentum Metropolitan (6% Divi; 6 PE); Old Mutual (7% Divi; 5 PE); JSE Ltd (7% Divi; 10 PE); Nedbank (7% Divi; 8 PE); Standard Bank (7% Divi; 8 PE); and Vodacom (6.6% Divi and 12 PE).
___STEADY_PAYWALL___The basics of my own research process is consulting the annual report to assess a likely earnings growth rate. Then plugging the numbers into my Excel model to calculate an intrinsic value (I did a webinar on my process in May 2016 – click here to watch). Provided the current share price at a 20% or greater discount to my intrinsic value number, calculation, the stock will be considered for inclusion in the portfolio. It’s fun. Hopefully profitable too.
More for you to read today:
- A Popular Front against the ANC/EFF. RW Johnson writes on what the opposition needs to do to challenge the liberation movement parties.
- This Should Have Been a Great Year for Gold. Here’s Why It Isn’t. The yellow metal is supposed to be a haven when stocks are a mess, but it is down almost 8% this year.
- Rising Bond Yields Change the Calculus for Stocks. Whether markets get any reprieve from their recent selloff depends in part on what happens at the Fed meeting.
- Why Do All These 20-Somethings Have Closed Captions Turned On? As automatic captioning on TikTok and creative audio descriptions on Netflix go mainstream, so does accessibility.
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