The 10 Best-Performing South African Stocks of 2012 (So Far)

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.

Photo by Andrew Ashton

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.

CompanyReturn (in US$)P/E RatioP/B RatioDividend Yield
Bell Equipment69.2%9.11.40.0%
Barloworld42.2%21.61.72.0%
Invicta Holdings37.9%11.82.74.0%
RMI Holdings37.9%15.12.25.0%
Pinnacle Technology Holdings37.6%9.83.41.6%
Hudaco36.4%10.12.25.5%
Group 535.7%10.51.23.1%
Super Group35.2%10.11.50.0%
Imperial Holdings35.0%11.42.25.0%
Clover Industries33.8%14.41.42.7%

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.]

Related Reading

The Ten Best African Stocks of 2012

Comments

  1. simphiwe Dube says:

    I wish to buy shares in one of these best performing companies. I would like to here from you how to do it.

    • Hi Simphiwe,

      You will first need to open a South African brokerage account. Perhaps through Thebe Stockbroking.

      Keep in mind that, while these stocks performed well last year, there is no guarantee that they will perform similarly in the future.

      Happy investing!
      Ryan

  2. Hi There, I’d love to know if investing in shares has an age requirement, even if funds are available. How old should you be to be able to invest in such major stocks, even other stocks?…

    • Hi Khutso,

      I’m not aware of an age restriction to invest in South African stocks, but to trade on the JSE, you must open an account through a broker. These brokers may impose an age restriction. If you are under the age of 18, you may need a parent to assist you with opening a trading account.

      Good luck and let us know what you find out!
      Ryan

  3. Thank you very much for the useful information. I hope the is more from where that came from.

    • Thanks, Sibusiso. Stay tuned for more articles. You can also submit your email in the green box on the right-side of the page to be alerted every time there’s a new post.

  4. I am wondering how much the political instability of the ANC will affect companies in the JSE?

    • Great question, Anon. Would be interesting to look back at how the JSE has performed during particularly unstable years throughout South Africa’s tumultuous history.

      I encourage investors to take a long view and not get too caught up in whatever news drives the day. Consider this, the JSE has posted a 41% USD return over the past six years in spite of political infighting, labor unrest, and instability in neighboring Zimbabwe.

  5. Hi, I am opening an account through PSG and new to buying shares. I am a student, and I don’t intend to buy and sell on a regular basis. What shares would you recommend that will be a low risk, and how many different shares would be safe?
    Thanks

    • Great question! For someone who wants exposure to the stock market, but does not have the time or inclination to research and follow individual companies, I would suggest investing in a broad index of companies listed on the Johannesburg Stock Exchange. You can do this by investing in an exchange traded fund (ETF).

      Two of my favorite South African ETFs are the SATRIX SWIX Top 40 and the NewFunds SWIX40. They both invest in the 40 largest stocks on the Johannesburg Stock Exchange but give a lower weight to mining companies. A fund like this one should have lower risk than investing in individual stocks and give a return comparable to the market at large over time.

      Happy investing!
      Ryan

  6. Hello, I would like to know the procedure of buying shares.

  7. Aaroni Iyer says:

    Hi

    Thanks for the info. I am a novice like many out there, and found trading through Standard Banks Online Share Account to be very easy, so those starting out, you may want to look at this.
    Ryan, do you have any advice for those of us trading via these accounts?

    Aaroni

    • That’s excellent, Aaroni. Glad to hear it.

      The only advice I’d have for those of you with online trading accounts is to keep careful track of your trading commissions. When trading is so simple, as it is via platforms like Standard Bank’s, it’s easy to get carried away and trade in and out of stocks on every piece of news. Make sure the costs of trading don’t take too big a chunk out of your returns.

  8. What are YOUR best JSE share picks for 2013?

  9. What companies would you suggest a first time buyer go for? And your picks for 2013?

  10. I have been very interested in buying Aspen shares, they have been doing very well (especially in the past year), what amazes me is that they have not been reflected amongst lists of the Top Performing shares in SA for 2012, even though its percentage returns have been about 64% in the past year. Is there something I am missing perhaps???

    • I never got around to compiling a 2012 top-performing shares list for South Africa, but Aspen did make shareholders very happy last year. But it was a good year for a lot of South African consumer stocks. Perhaps ten of them had even better years?

  11. Where can one buy shares or through what can one buy shares and incur the least cost/commission for the transactions carried out?

    • Hi Gregory,

      In most African countries, all brokers charge the same commission rate. Typically it is a percentage of the total trade value, and it’s often about 2%.

  12. Hi Ryan, Thank you for this beautiful information. How much must I save to buy shares? How can I find a good broker? Do I need to get a lawyer to buy shares?

    • Hi Mbali,

      You don’t need a lawyer to buy shares, but you do need a good broker. Let us know which market you intend to invest in, and someone may be able to suggest a good broker.

      Take a look at this article to help you decide how much you need to save before buying shares.

      Happy investing!
      Ryan

  13. How can I invest in Sage unit trusts?

  14. Hi Ryan, nice article, how about some insight into 2013′s movements on the JSE? JUst a bit of info for those interested in online trading platforms. I am a student doing hons in eco’s, I use FNB which is user friendly, and easy to open, the brokerage is not cheap but I am in it for the long haul so the fees don’t make to much difference after holding a stock for a few years, one thing I did notice is that although their brokerage is a % of your purchase value they do have a minimum fee so it is more expensive to buy shares to the value of less than R5500 +- as you would pay the exact same brokerage fee for a purchase of R4000 worth of shares as you would a purchase to the value of R5000. I hope this makes sense and helps.

  15. If the broker is trading for you, is there a possibility of them losing your money?

  16. I am a Zimbabwean. Can I buy shares in South Africa?

  17. I am currently residing in South Africa and don’t plan to leave. Is it possible for me to invest in the New York Stock Exchange while being here? If yes, are there any things I need to be cautious about?

  18. Hennie Visser says:

    Hi Ryan,
    What advice would you give for someone who gets a nice cash windfall? Where should one start to look for the best ways of investing? Thanks

    • Hi Hennie,

      That’s a nice dilemma to have!

      I would first advise paying off all credit card debt. The returns you get from this are guaranteed and in many cases are comparable to the long-term return you might expect from the stock market. Next, I would advise setting aside six months worth of living expenses as an emergency fund. Invest this in something extremely safe and liquid, like a bank savings account or money market fund.

      If there is still money left over, then you might think about investing in the stock market. Consider how actively you wish to research and monitor your investments. If this isn’t something you enjoy, I would advise investing in a broad-based, diversified index fund. If you enjoy stock-picking, but are new to investing, stick with companies that you know and understand very well. Always invest with the mindset of being a partial owner of a company – not a bettor at the racetrack.

      Have fun!
      Ryan

  19. Hi Ryan,
    Can I get a broker who will only charge me on my profit. I dont want to find myself in a situation whereby I lose even a few cents of my initial investment.

    • Hi Bheki,

      I’m afraid not. Brokers are compensated per transaction. Any investment gain or loss accrues solely to the investor. The arrangement is similar to a homebuyer and real estate agent.

      The best way to keep broker fees low is to trade as infrequently as possible and to find a broker that charges a low flat rate instead of a percentage of the total transaction.

      Hope this helps!

  20. Mutondi Tshivhase says:

    Hey Ryan,

    Thanks for such a wonderful site, I am a High School student and I am interested in buying shares , please give info on which platform to use and also the minimum amount.

    Kind Regards.

  21. Bernard Lehlokoa says:

    I would like to learn to buy some shares to make money. I am a metro-cop at JHB.

  22. Hi Ryan

    You dodged a question a bit further up the comments and its something i would really love to know more about: How difficult is it to invest in the New York stock exchange and how would you go about it?

    • You caught me, Ray! I try not to get to caught up in topics related to investing on the NYSE as this blog is focused on investing in African markets.

      It can be quite difficult for non-US citizens/residents to find a broker to help them invest in US markets. Many of them permit citizens of certain countries but not others. I would suggest contacting Interactive Brokers about opening an account. They are known to be one of the best brokers here for international investors.

      Good luck and let us know what you find out!

  23. Duduzile Siti says:

    I would like to buy shares, but I don’t know where to start. I would use any help and information I could get.

  24. Hi Ryan,

    What are your thoughts on Sephaku Holdings’ Share price in the 4th Quarter & next year.

    • Hi Paul,

      I haven’t followed the stock closely, but for what it’s worth, PPC’s CEO has been buying lots of shares of his own company’s stock recently — a bullish indicator for the cement industry.

      All the best,
      Ryan

  25. Siyabonga says:

    Hi Ryan
    Thnx for info, how would you advise a young person who is hearing about the investment for the first time who would like to invest.

    Kind Regards,
    Siyabonga

  26. hi
    i would like to know at what rate do shares or stock go for in big companies for a stater like me who doesnt have that much cash

    thank you

  27. I also not well informed when it come buying of shares, can somebody explain to me how start buying shares please

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