Alec Hogg: Blue Label Telecoms – a sleep-easy bet on SA’s move to pre-paid electricity, water meters
By Alec Hogg
Investing is not rocket science. Take a close look at the company you want to buy into and decide whether its sector is likely to flourish. Work out whether the shares are historically cheap relative to the potential returns. And then once you actually buy the shares, have the courage of your convictions and ride through any doubts when others don't share your view.
South Africa makes this easier than in many other geographies, largely because of the way the country is transforming from consequences of idealistic poppycock to modern economic realities. Witness two sectors affected by misguided political ideology – education and health – providing some of the JSE's most exciting investment opportunities (Curro, Advtech, Discovery, MediClinic, etc).
Among the new realities is that municipalities cannot afford to indefinitely provide electricity and water to non-payers. As a result, the switch to pre-paid meters will gather momentum. That suits market leading distributor of pre-paid vouchers, Blue Label Telecoms. Well managed, well priced (850c v 675c at its 2007 listing) and with a strong balance sheet, the only surprise is that investors haven't caught onto its attractions. Yet. Those buying today let the trend to pre-paid meters be their friend. Not rocket science, is it?
Response from Peter Sullivan
I was once the after-dinner speaker for SEIFSA. They corrected me: there is no such thing as rocket science. Scientists don't make rockets. Engineers do.
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