Construction stocks dominate this list of the Johannesburg Stock Exchange’s top performers thanks in part to President Zuma’s announcement of “massive” infrastructure development. Share prices in the sector are at their highest level in three years as investors anticipate a turnaround.
But hard hats are not required in order to read further.
Companies from a range of other industries bulldozed their way into the top ten, too. All of them have gained more than 30% in US dollar terms since the beginning of the year.
Let’s count them down.
10. Clover Industries +33.8%
Clover, South Africa’s largest dairy company, milked its product line for all it was worth during the first half of FY2012. Earnings grew 16% on the back of a 7% sales increase. But what has investors happily chewing their cud is management’s decision to pay out a mid-year dividend. The stock now yields 2.7%.
9. Imperial Holdings +35.0%
Imperial gobbles up companies like I gobble up Skittles. The conglomerate owns trucking companies, South Africa’s largest auto-dealer network, construction equipment distributors, and insurance companies. But it’s hungry for more. Sometimes such acquisitiveness can create ugly balance sheets, but investors have been encouraged that debt levels have been reasonably well maintained.
8. Super Group +35.2%
Super Group lived up to its name over the first half of FY2012 – boosting earnings by 63%. The company operates three divisions: supply chain, fleet management, and auto dealerships. It’s made a promising foray into African logistics and jettisoned some under-performing assets. Management has thus far declined to offer a dividend, but cash is beginning to pile up on its balance sheet.
7. Group 5 +35.7%
This construction and engineering firm has helped to build many high-profile South African infrastructure projects. Now it wants to cement a reputation as a continent-wide player. The company generated 26% of its revenue outside South Africa in the first half of FY2012, and management wants to grow that to 40%. A healthy pipeline of new projects has added to investors’ bullish outlook.
6. Hudaco +36.4%
Shares of this stolid machinery parts distributor rocketed to a 22-year high in January after the company announced a 29% earnings increase. Management also jacked up its dividend 26%. The stock continues to yield 5.5% even after the big appreciation in the share price this year.
5. Pinnacle Technology Holdings +37.6%
Pinnacle Technology owns the licenses to distribute some very popular computer and networking brands, including Dell, Samsung, HP, and IBM. It also assembles its own line of PCs. This product mix proved popular with customers during the first half of FY2012. Sales soared 32% over the previous year. The company is on the prowl to add more product lines to its stable and is particularly keen on expanding north of its South African home. It has set up shop in Botswana and Namibia, and plans to enter two more countries soon.
|Company||Return (in US$)||P/E Ratio||P/B Ratio||Dividend Yield|
|Pinnacle Technology Holdings||37.6%||9.8||3.4||1.6%|
4. RMI Holdings +37.9%
A relative newcomer to the Johannesburg Stock Exchange, RMI Holdings debuted on the market in March 2011 after being spun off from financial services group, RMB Holdings. RMI owns stakes in a range of South African insurance companies. Recently, the most profitable investment in its portfolio has been OUTsurance, a property and casualty insurer. OUTsurance’s earnings grew 54% during the first half of FY2012.
3. Invicta Holdings +37.9%
Like Hudaco, Invicta is a big player in ball-bearings, spare parts, and sealants. (Hey, this is a list of South Africa’s top-performing stocks, not necessarily its sexiest ones.) Much of what they sell goes to the farming and mining sectors. Both sectors are in a bit of a boom. In November, Invicta reported a 23% earnings bump for the first half of its 2012 fiscal year.
2. Barloworld +42.2%
A large conglomerate, Barloworld’s primary earnings drivers are the sale of heavy equipment and vehicle sales and rentals. After a rather dismal 2010, the company reported a 120% surge in profit and more than doubled its dividend payout. In November, a coal-mining operation in northern Mozambique ordered 10 ginormous Caterpillar dump trucks from the company. The trucks’ price? $400 million. No wonder the company trades at more than 22x trailing earnings.
1. Bell Equipment +69.2%
Bell makes all the stuff that my four-year-old nephew dreams about – big yellow bulldozers, dump trucks, diggers, and backhoes. The construction and excavation equipment maker posted a 49% increase in sales during 2011 thanks to new markets in Russia and Mozambique. It’s one of the cheapest companies on this list in terms of trailing earnings multiple (P/E Ratio: 9.1), but it doesn’t pay a dividend.
So, that’s how it all panned out. What companies will be in this list come July? Let us know your picks in the comments!
[Disclosure: I do not own any stocks mentioned in the above article, and I don't intend to purchase any in the next 72 hours.]