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Three smaller companies getting noticed

Zeder, EOH and Anchor Group are popular with the Moneyweb community.

Despite a relatively choppy first quarter of 2015, Moneyweb readers are continuing to display an appetite for shares which sit outside of the JSE Top 40. 

Our recently updated Click-A-Company provides us with valuable insights into how community members are thinking and which companies and sectors are most popular at any given time. An interest in smaller and mid-capitalistion shares suggests that they have not been put off by recent market volatility. 

Three shares on the bourse have attracted above-average levels of interest and we take a closer look at the companies and what analysts believe the prospects are for some of these businesses: 

EOH Holdings: The eighth most searched for share in March 2015, EOH has been a success story in the South African tech sector, having risen from R11.50 five years ago to north of R150 today. In a country where technology success stories are few and far between, EOH has been a standout but on a current price to earnings multiple of around 30 times earnings questions are being asked as to whether it may now have risen too far too fast.

Moneyweb research partners Intellidex reviewed the stock back in January and noted: “Overall, EOH presents a solid investment case whose business is built on a low-risk, service-based model with good annuity income characteristics. This, coupled with a management team that is superb at cherry picking value-adding acquisitions, identifying emerging trends in the IT space and has excellent capital allocation abilities, makes EOH a good fit for investors looking for a steady growth counter to add to their portfolios.” 

Stockbrokerage Imara SP Reid reviewed the stock in its April “Stocks ‘n Strategy” newsletter where it noted: “The sale of software and intellectual property to international clients is an exciting prospect given that margins in the software segment are the highest and likely to remain so for some time. This should also help to advertise the skills held within EOH to get a foot in the door for other comprehensive solutions. EOH has a great track record of value adding acquisitions (“joiners”). The price has enjoyed a sharp run up of late and does appear full at current levels but we maintain our ADD recommendation with a buy the dips strategy.” 

Anchor Group: The fifteenth most searched for stock on Moneyweb during March 2015, Anchor Group has done everything right from a shareholder perspective since listing in September 2014. The asset management group surged from a listing price of R3 to an all-time high of R12.20 in March 2015, before pulling back to around R10.50.  

While the share price movement has invariably been a driver of reader interest in Anchor, the company has garnered a fair amount of publicity following revelations that it may be linked to financial services group Belvedere, which is being accused of being operated as a Ponzi scheme. Chief executive officer Peter Armitage has spoken to Moneyweb and distanced Anchor Capital from the accusations.

Anchor has proven itself to be an innovative and disruptive influence in the traditional asset management marketplace but there have been nagging concerns from investors that its growth has been too rapid and the share price growth has not been consistent with the growth in assets under management.  

Zeder Investments: The agriculture arm of investment powerhouse PSG, Zeder has delivered a 96% return over the last 12 months and analysts feel there may be more upside as well.  

Interestingly the lesser-known Zeder is the seventeenth most searched for share on Moneyweb with PSG coming through in twenty-sixth position. 

Vunani Securities small-cap analyst Anthony Clark remains bullish on the stock: in a new note to clients recently he set a price target of R8.40.

Brokerage Imara SP Reid also rated the stock as an ‘add’ in January 2015 when the share was trading around R7.30 per share. It pointed out that the “Sum of The Parts” valuation Zeder uses for valuing its assets came in at R8.76, suggesting more upside.

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Sibonelo Ngema

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