Johannesburg - Investors fearing the JSE had overshot itself should prefer defensive or value stocks, according to Stephen Meintjes, an analyst for Imara SP Reid.
Speaking on Fin24.com's AM Stocktake, a daily podcast programme, Meintjes said there was "plenty" of value left on the JSE.
The JSE All Share index has gained 8.9% since June reversing a severe pullback amid the global recession, itself a function of the financial crisis.
Meintjes also recommended investors consider the merits of gold stocks, currently pressurised by the strength of the rand against the dollar but benefiting from a gold price surge.
"We have a market that many people think has gone ahead of itself, but there is still plenty of value," said Meintjes on AM Stocktake.
Reinet Investments, an equity holding company controlled by the Rupert family, is a good defensive share, he said. "It's basically an investment in British American Tobacco (BAT). The discount's gone right out to 20% which means that it's quite a good buy," Meintjes said.
The widening discount stems from speculation BAT's JSE status will be altered to an inward listed investment. As a result, institutional shareholders may no longer feel the need to buy it through Reinet, he said.
Some companies like Anglogold Ashanti and Gold Fields are "for first time in some years getting into shape to provide leverage to the gold price," Meintjes said.
According to Meintjes, bullion should achieve further mileage in the next year or two and so gold shares should do better than the exchange traded fund Newgold.
Meintjes also backed construction firms Murray & Roberts and Group Five as there had been oversold on fears that the conclusion of work related to the 2010 Fifa World Cup would dry up their order books.