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Best performing shares since January

But you might want to take some of these figures with a big pinch of salt.
Many are penny stocks, with a few cents increase in the share price translating into a huge percentage gain. Image: Moneyweb

No fewer than 11 shares have increased by more than 100% since the beginning of the year.

The best of the lot, ArcelorMittal, has jumped 418% since January. Brikor increased by 347% and Novus by 204%.

However, asset management consultant Capital Sigma, which ran the exercise to identify the ‘best’ 35 shares, warns that not all the shares in the list must be seen as sound investments.

“You have to do your own analysis,” says the software and consulting services company that specialises in business intelligence for the asset management industry.

Penny stocks

A look at the list immediately shows that many of the shares that have performed well since January didn’t really perform well.

Most are so-called penny stocks and mostly illiquid, and a rise of a few cents in the share price translates to a huge percentage gain. But few investors will be able to get in at low prices, or out when the price has increased.

In addition, these cheap shares are notorious for attracting speculators, without offering much by way of fundamental value.

Brikor as an example …

Brikor’s present price of 53 cents is way above the 12 cents in January before it spiked to 199c in May after it announced that headline earnings for the year to February had increased by a massive 2 000%.

It sounds good, until one sees that the huge increase in profits pushed headline earnings per share up to only 2.1 cents. At the time, the price of 199 cents represented a price-earnings ratio of nearly 200 times.

Since then, this penny stock has lost 73%.

Similarly, the list shows that Aveng has increased by 168% since January. But the share price of four cents means the share moved 33% in only one day when the price increased from three cents to four cents.

The 140% increase in Chrometco’s share price is equally misleading – it increased from four cents in January to 11 cents at the time Capital Sigma ran its figures.

The same goes for Jasco, Conduit Capital and Stefanutti Stocks. Another is Kibo Energy, raising the question whether an investment in a coal mine in Tanzania is prudent.

Alphamin is also high on the list of good ‘performers’. The share rose sharply to 920 cents compared to levels of around 220 cents for the most of 2020. Maybe speculators got excited about reports that the mining concern produced higher grade ore at its tin mine in the Democratic Republic of the Congo.

The 35 best performers on the JSE so far this year

Share Price % gain since January
ArcMittal 520 418
Brikor 53 347
Novus 282 204
Alphamin 920 171
Aveng 4 168
Chrometco 12 140
PPC 299 133
Jasco 41 124
Conduit 69 117
Grindrod 491 116
Texton 320 108
South Ocean 73 97
Sephaku 134 91
Steinhoff 190 89
Purple 160 82
Distell 17 221 81
Tsogo Sun 901 77
MTN 10 815 76
Mpact 2 375 75
Motus 9 384 74
Argent 1 185 73
Sasol 23 236 72
Renergen 2 075 72
Kibo 12 71
Massmart 6 765 67
ARB Holdings 578 66
Sabvest 4 900 65
SAB Zenzele Kabili 18 000 64
City Lodge 406 63
Truworths 5 796 63
Royal Bafokeng Platinum 10 000 62
Insimbi 97 61
Stefanutti Stocks 44 61
Finbond 159 61
Hammerson 843 60
Stadio 320 59

Source: Capital Sigma

Recovery stocks

There are quite a few recovery stocks on the list. Most noticeable would be Sasol, a favourite of many investors for many decades. The price had increased by 72% since the beginning of the year and by nearly 1 000% since its temporary low during the Covid-19 market crash.

Investors are also hoping that PPC will get its problems sorted. The share was as low as 55 cents during the last few years, compared to nearly 800 cents only three years ago. Nobody wants to be reminded that it was way above R30 in 2014.

MTN has recovered to its 2019 highs of above R110 after it fell to less than R30 in May 2020.

There are also investors who believe Massmart has a chance. After declining steadily from R120 three years ago to a low of below R24 per share, it has recovered to current levels just shy of R68. The recovery received a little boost from a trading update at the end of May noting that sales had increased by 8% during the first few months of 2021.

Truworths, City Lodge and Motus are also recovering from Covid-19 lockdowns, while Royal Bafokeng Platinum is benefitting from higher platinum group metal prices.

Other interesting moves

The strong move in Distell (up 81% since January) comes on the back of the recent announcement that Heineken had approached it with the intention of acquiring the company – which has been undervalued for years, if not decades.

Read:

Purple eventually showed some strength. The share has been stuck between 20 cents and 30 cents for years until it started to rise middle last year. Now 160 cents, investors are hoping that its investments in stockbroking and derivative trading platforms will start to earn them some real money.

Read:

Another interesting share on the list is SAB Zenzele Kabili.

Its move of nearly 70% since its listing is puzzling, because it is not worth close to its current R180 per share.

The increase can probably be attributed to its new, uninformed shareholders who did their calculations wrong.

Read: Why is SAB Zenzele Kabili trading at three times its value? (Jun 11)

Meanwhile, the JSE All Share index shows that the market has not been doing badly during the first few months of 2021 – it’s up by 16% with market commentators indicating that shares are still offering value.

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COMMENTS   6

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Thank you, if this is not an asset bubble, then what is? This is the side effect of low interest rates and greed: Chase returns and ignore fundamentals. Prices will just go higher and higher, right? Only until the smart money exits the stock market.

I’m glad the author clarified it, because a statement like: “The best of the lot, ArcelorMittal…Brikor ….” is a totally misleading opening line. To understand these increases, you must understand where they come from and historical losses incurred, for a share like ArcelorMittal. Also, anybody investing in Brikor is purely speculating. The share was suspended for almost 8 years, traded at 1c for another two or three. Owners, directors, wives fighting. Shady, marginal clay and coal pits in a prestigious wetland (Blesbokspuit). Can’t understand how such a company can even be listed.

The same applies to ArcelorMittal, no profit for 7 or 8 years?
Which company can survive that long?

Plus they have to compete against China.
China is very competitive and if they had 80 steels mills shutdown, what makes you think that you can make a profit?

You are a little agitated with mittal I see.

Yes , the losses were big, but the gains were huge and if you timed the market well, you’ll be smiling all the way to the bank

half of those stocks are absolutely pointless, without volume you can’t buy/sell anything, waste of time on the mickey mouse clown JSE.

End of comments.

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