Capitec and Naspers continue to win the admiration and pockets of institutional investors with the two companies featuring high on the list of hot stocks picked by SA’s largest asset managers.
SA’s largest manager, Ninety One, Stanlib, Old Mutual Private Wealth, FNB Wealth and Investments all list Capitec as a preferred stock. Naspers also features prominently.
Hannes van den Berg, head of SA equity & multi-asset at Ninety One, favours Capitec, Naspers/Prosus, Tiger Brands, Discovery and AngloGold Ashanti.
He said the core of the group’s strategy was to invest in companies that were receiving upward revisions to their earnings expectations and were trading at reasonable value.
“Our earnings-focused approach does not necessarily seek to invest in the companies with the highest earnings growth (as these shares might be trading at expensive levels). We look for investments where there is a change in expectations — where expected earnings growth is being revised higher,” Van den Berg said.
“We believe that a more consistent performance profile is possible by ‘blending’ valuation (a longer-term, mean reverting fundamental factor) with earnings revisions (a shorter term, or behavioural factor). There is a ‘tension’ between earnings revisions and valuation in our opinion. Successfully navigating this ‘tension’ ensures a more consistent return profile.”
Capitec, which has ballooned to a valuation of R410bn after a 289% rally in its share price over the past five years, is worth just under R3,500 a share on the JSE. Naspers fetches just over R5,400 a share.
Stanlib, which has almost R700bn in assets under management, has Capitec, Momentum, Clicks, Outsurance and Life Healthcare as its top picks.
“Outsurance has a return on equity of 34%, supporting its quality rating and a strong growth rating due largely to the strong growth in its Australian operation,” said Andrew Cuffe, head of research at Stanlib Systematic Solutions.
“We are cognisant of the potential volatility in Outsurance’s earnings that may be caused by climate-related events, but we see management as well prepared to manage through these events.”
Boston Consulting Group’s (BCG) 2025 Value Creators report said Outsurance, one of SA’s best corporate stories of the past two decades, is the country’s leading company in terms of total shareholder returns (TSR) over the past five years.
The report found that Outsurance, valued at R120bn on JSE, leads in SA with a 38% five-year TSR. Other local companies that have delivered superior returns include Harmony Gold and Gold Fields. Pepkor, Discovery, FirstRand, Sanlam, Kumba, Naspers and MTN complete the top 10.
Chantal Marx, head of investment research at FNB Wealth and Investments, has Mr Price, Reunert, Bidvest, Curro and 4Sight Holdings as her top picks.
Regarding Bidvest, she said the group was well run with a decentralised business model that continually sought scale and growth.
“The company is well-diversified across a variety of sectors — both cyclical and noncyclical — with no one segment contributing more than 25% to profit. The group’s growing offshore exposure has also provided further diversification benefits,” she said.
Old Mutual Private Wealth’s top picks are Capitec, Mr Price, Reunert, Valterra Platinum and Naspers.
Commenting on Naspers, which is valued at R900bn on the JSE, Old Mutual Private Wealth research analyst Tasneem Samodien said: “While many of the group’s platforms remain unprofitable, there is sufficient evidence to conclude that, in time, they will be profitable, as we have now seen in the accelerated turnaround in e-commerce and overall narrowing of losses across business segments.”
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