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Cape Town - Brett Birkenstock of Overberg Asset Management lists his five shares with interesting actions for the week ahead:
1) AB InBev [JSE:ANB]
In January, the Belgian Beer brewer, Anheuser-Busch InBev, listed on the JSE. At the opening bell the price of AB InBev was R1938 per share. When AB InBev decided to buy SAB Miller in October 2015, the SAB share price jumped from R610 to over R900 per share.
Putting the merger in a global context, AB InBev will supply its products to most countries around the world and will be one of the biggest companies in terms of Earnings Before Interest Tax and Dividends (EBITDA). Their EBITDA will be higher than that of Nestlé and Coca Cola. With AB InBev having a noteworthy position in emerging markets, it will rely on emerging market currencies to strengthen to significantly increase earnings.
2) Mr Price [JSE:MRP]
Mr Price recently released their third quarter trading update for the period of 27 September 2015 to 26 December 2015. The results were very much below market expectations and the share price has been punished accordingly. Overall sales grew by 6.5% with like for like sales growing by only 3.4%. This is with selling price inflation of 6.6% and weighted average space growth of 3.8%.
The South African Apparel division has performed decently with total sales up 9,2% for the quarter, with 6.2% like for like growth. Outside of South Africa sales declined by 3.2% for the quarter. Mr Price sport grew its sales by 12.4% (5% like for like).
3) Satrix Resources Portfolio [JSE:STX40]
The Satrix Resources Portfolio is an exchange traded fund managed by Satrix that tracks the value of the FTSE/JSE Capped resources 10 index. With resource companies struggling due to low commodity prices and increasing input costs, Satrix resources have lost more than half of their value since July 2014.
However, the bottom in resources might be approaching as we have seen some weakening of the dollar of late which in turn is good for commodity prices. With markets overshooting both on the upside as well as the downside, the Satrix Resources Portfolio offers investors a good diversified portfolio of resource shares.
4) Arrowhead Properties [JSE:AWA]
Arrowhead Properties has seen its share price decline as the fear of a South African rating downgrade is growing. With bond yields increasing, property shares on the JSE has been declining. Having reached R10.55 in May 2015, the negative sentiment towards the downgrade has pushed the share price down to as low as R7.20 recently.
The selloff in Arrowhead may very well be overdone as they have managed to secure fixed interest payments on their bonds. At around R8 a share, Arrowhead is trading at a yield of over 9%. With their strong portfolio they are likely to keep distributions stable.
5) Holdsport [JSE:HSP]
In November of 2015, Holdsport reached R69 per share. Currently it is trading at R49 per share due to the the market selloff and weak rand. At R54, they are paying a 4.5% dividend which should remain stable. Holdsport has shown a constant increase in revenue annually. The business delivers decent operating margins and their headline earnings per share has also shown steady growth since 2012. Headline earnings for the first half of 2016 was above R2. Historically, the second half of the financial year has been stronger due to Christmas sales.
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* Brett Birkenstock is a director at Overberg Asset Management (OAM), an authorised financial services provider (No 783) which specialises in the private management of local and global discretionary portfolios as well as pension products.
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