Chief investment officer Duncan Artus says SA Inc stocks look cheap — but perhaps there’s a reason
Allan Gray, the privately held asset manager that oversees about R560bn in assets, is worried that certain domestic stocks risk becoming “value traps”.
The JSE all share index is trading on a relatively cheap price:earnings ratio of 11.8, which compares with a long-term average of 15.4 since 1995. That means investors are willing to pay about 11.8 times earnings on a per share basis to own the typical JSE-listed equity right now, compared with more than 15 times over the longer term.
Artus said investing offshore has become more complex in this geopolitical environment in which countries such as China and Russia appear to be leading many emerging markets away from an alliance with the West. So while Allan Gray has been underweight the US market for several years, Artus said one cannot simply write off investing in the world’s biggest economy. That’s despite the S&P 500 trading at a high 18.77 times, while growth stocks such as Apple and Alphabet trade at an even more expensive 27.8 and 23.
“In the local market we’re looking for companies that have been able to grow profit without relying too much on the economy,” he said. “A lot of our stocks don’t have a lot of foreign owners on their share registers any more,” he said. “You need the foreigners to come back and buy — or you need large buyouts like when Pepsi bought Pioneer Foods or Heineken [took over] Distell.”
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Pick of the Month: The unrecognised value of GrindrodThe share has weakened despite the company offering promising potential for growth, joint ventures and consortium agreements
Read more »
MTN offers value … but not without risks[ICYMI] MoneywebNow podcast with SimonPB, analysis of MTN’s quarterly reports for its West African business and tips for investing in shares. Download podcast:
Read more »
Pick of the Month: The unrecognised value of GrindrodThe share has weakened despite the company offering promising potential for growth, joint ventures and consortium agreements
Read more »
Crypto in the UK growing faster than anywhere else - IT-OnlineThe global crypto market is expected to gross $37,8-billion in revenue this year – 105% more than in 2022 – and almost half of that value will come from the the world’s largest crypto market, the US. Although the US market accounts for the largest share of global crypto revenues, one other crypto market is […]
Read more »
Making money from music | BusinessThe music industry is a fascinating subsector of the entertainment business for investors. Seleho Tsatsi believes that UMG and Spotify make for interesting investment cases.
Read more »
Pick of the Month: The unrecognised value of GrindrodThe share has weakened despite the company offering promising potential for growth, joint ventures and consortium agreements
Read more »