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Online Share Trading

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NAV watch

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Not applicable
Any stocks worth considering out there? To make a NAV play, a stock needs to show signs of recovery - ROA increase, debt decrease, better margins, better cash flow, no accounting tricks (See Piotroski for more info on this type of strategy). I am a great supporter of this approach, but it is a mission to find suitable stocks. Current candidates are KAP, CIL, RACEC and POYNTING. Anyone else got any ideas?
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10 REPLIES 10
kwagga
Super Contributor
I'm watching Hulamin daily. Trading way under NAV due to poor earnings in a very cyclical environment. Definately potential, just waiting for the technicals to play along.
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Not applicable
unfortunately poor cash flow, decreasing margins and decreasing turnover makes it a poor candidate. Add the trading statement to the mix, and it is not on the list, unfortunately.
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striker
Super Contributor
- skaap - I've been watching UNI for some time - good trading update recently. I think this was the old Macadams group ( same executive ) The only problem with this share is low volumes and liquidity - tighly held. What's your take ?
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warhippo
Super Contributor
I like Trencor (TRE) but price has gone up the last 2 weeks on good numbers from USA see SENS. Another could be Pallinghurst if somebody knows how to value them. Whats your take?
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kwagga
Super Contributor
much of what you just said is due to capacity expansion of R 900mil and capital raising to fund that. a depreciating rand (80% export based company) is good business for them, and coronation fund managers bought Anglo's stake in them at R12 which they though at the time offered great value. like I said, i won't buy right now, but I am watching. if the market suspect a bottom in earnings and a turnaround on the cards, this share will fly. mark my words. annual earning out end feb. no sin in just watching from the sidelines.
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kwagga
Super Contributor
also watch zeder, pallinghurst, sentula, supergroup
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THRESHOLD
Super Contributor
Be careful of NAV. Firstly it must be tangible. SECONDLY - it is pratically meaningless unless you have a willing buyer for the assets in question. So CASH is good and then we go downhill fast as the liquidity of the asset drops. A commercial property, for instance, can be more of a liability than an asset. A mine might be capitalised at billions - but a shift in the rand can render it nothing more than a big whole in the ground which somebody has to pay to fill in again.
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Not applicable
Good point regarding NAV, it is difficult to measure. The strategy (using Piotroski)uses NAV as a filter for undervalued stocks and calls for a nine point check list to be ticked off. With regards to some of the stocks selected - NAV discounts for investment companies like Pallinghurst are pretty meaningless. The underlying assets are themselves publically traded, so you would need to assess what the NAV of each of those stocks are.
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Wino
Super Contributor
A share I have been nibbling on is ALT. ROA consistently in mid 20's, good cash flow D:E 16 to 20%. Like to see a better current ratio but a well managed co. Has a great future and well positioned to capitalise on digital TV. Share very up and down down due to broadband issues in East Africa. Looks good for the long term
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Blik
Super Contributor
A little computer company I have had for a while may be worth a look. ISA has 29mill in cash and good earnings. It has an attractive ROCE as well. It's up from a price of about 21 to just above 60, and has over the past few years paid decent dividends and capital reductions. I know its tiny - but sometimes small companies are not that bad or that risky for that matter.
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