Stocks: what's in store in 2010?

Johannesburg - The JSE surprised observers with a strong run in the second half of the year, but the big question is: What should we expect in 2010?

Portfolio managers agree that the past year's surges won't be repeated.

Alwyn van der Merwe, director at Sanlam Private Investments (SPI), says it is unlikely that shares will rise at the same tempo.

Share prices now need to be supported by a recovery in company earnings, he reckons.

Nevertheless, the low interest rates will sustain share prices.

The BoE Private Clients research team expects a rise of between 10% and 15% on the all-share index, if shares are carefully selected.

BoE and SPI both have MTN on their shopping list.

MTN's growth prospects are good and it is gaining market share in Nigeria, Iran, Uganda, Cameroon and Afghanistan.

Now that the Bharti transaction is off the table, management will be able to give its attention to controlling costs and to the core business.

Standard Bank is SPI's favourite banking share, while BoE prefers Rand Merchant Bank Holdings (RMBH).

SPI says Standard Bank's revenue stream is well diversified between emerging markets and the competent management team ought to reward long-term investors.

Investec plc is well capitalised and could show strong recovery as the economy gets back on its feet.

BoE says RMBH, with its subsidiaries Rand Merchant Bank, First National Bank, Momentum and Discovery, could benefit from the economic recovery.

Among the platinum shares SPI opts for Northam, and BoE for Impala Platinum.

Northam has achieved good results in difficult market conditions and its reserve of 100m ounces could make it a takeover target for larger producers.

BoE plumps for Impala because the miner's production costs are low and platinum demand will increase.

SPI expects that Sasol will benefit from the oil price and this stalwart could unlock good value if it sheds its chemical division.

Steinhoff is a counter that SPI will watch keenly.

Its operations are geographically well spread and a weaker rand should support its earnings.

BoE's choice to settle nerves is Aspen, the market leader in the pharmaceutical industry. It's a defensive stock that is not overly affected by stock-market corrections, and its international expansion could unlock value.

- Sake24.com

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