Cape Town - Brett Birkenstock of Overberg Asset Management lists his five shares with interesting actions for the week ahead:
Steinhoff [JSE:SHF]
Steinhoff was raised to investment grade ( Baa3) by Moody’s last week. This is due to expectations that the company will maintain its deleveraging trajectory. Steinhoff recently announced its intention to acquire a large section of Pepkor, which will broaden its global exposure. Some analysts consider Steinhoff a strong candidate for inclusion into the DAX30. The company can possibly be considered “cheapish”, with good growth potential and a broad market exposure.
Mr Price [JSE:MPC]
Mr Price has released results for 52 weeks ended March 28 2015. Diluted headline shares were up 21% as expected, while total revenue grew to R18.1bn - up 13.9%. The company increased its divided 20.3% to 580 cents, which was in line with guidance.
Mr Price is trading at a demanding price with a forward P/E of 22 and a forward dividend of 3% and with this in mind, management has indicated it will enter the Australian market with a phased approach: fools rush in where others fear to tread? It will be interesting to see how the success of this venture Down Under compares to Woolies' [JSE:WHL] entry into the Aussie market with retail stores David Jones.
EOH [JSE:EOH]
EOH announced the acquisition of a stake in Twenty Third Century system and its subsidiaries for an undisclosed figure. TTCS is an African IT and business solutions provider with offices in numerous African countries; it also provides services to the Middle East.
EOH seems excited by the acquisition and stated that TTCS will “significantly augment” its pan-African growth plans. TTCS seems a good buy for EOH to further diversify its growth plans outside South Africa. The company is not cheap on a forward P/E of around 22, but given its previous growth is well within range.
Sanlam [JSE:SLM]
Sanlam released an operational update for the four months ended April 30, with normalised headline earnings per share up 17% and net result from financial services up 8%. The net result was largely affected by poor sales in emerging markets, where 2% is well below what is needed in a long-term growth area. Sanlam is trading on a premium to embedded value of around 44%, which leaves a lot for management to do to continue the strong share price growth seen over recent years.
British American Tobacco [JSE:BTI]
The company released an announcement that it was not party to the Quebec class action judgment (however, its Canadian subsidiary Imperial Tobacco Canada was). Imperial Tobacco was ordered to pay CAD10.4bn; however, it feels it has strong legal grounds to both the overall judgment and stay of execution and will do this within 30 days.
On a more positive note, British American Tobacco has announced the acquisition of TDR, a cigarette manufacturer in Central Europe with a position in Croatia and a position of scale in Bosnia and Serbia. British American Tobacco was also recently added to JP Morgan’s European analysts focus list.
Do you agree with Brett's stock picks? Tell us why and send us yours.
* 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.
Disclaimer: The above article does not constitute financial advice and is not a recommendation. Investors must always seek the advice of professionals and trade with caution. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.