One to buy as strong earnings bolster markets

by , 10 May 2018
One to buy as strong earnings bolster markets
Global markets are being held up by strong first quarter earnings releases and US data from last week that signals US inflation is being controlled.

Over 80% of the S&P 500 has released Q1 results and 78% of them have exceeded expectations. If the trend continues it will be the highest proportion of “beats” in almost 10 years.

This earnings growth is keeping valuations in check, the S&P is on a forward PE of 16, a fraction below the 5-year average of 16.1.

Last week, the rand rallied strongly after US employment data and wage growth signalled inflation should remain within target and US interest rates will not be hiked aggressively.

This is good for emerging markets and should provide support after a brief sell off to start May.
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Very soon, controversial new legislation will come into effect:  
 
And it could cause the price of one little-known stock to explode.
 
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Last week’s movers and shakers… 


One to Buy
 
Dis-Chem falls into buying territory
 
Dis-Chem shares are down 22% on negative results surprise. Earnings grew by 12.1% for the full year, indicating a significant decline in the second half. Weakness came from its wholesale business, which its building new capacity, earnings will jump if the wholesale business breaks even as management expects.
 
This is an opportunity to pick up stock in a company that has been very lofty since listing 18 months ago. Organic growth remains strong and a high return on equity with low debt levels should see improved earnings in future.
 
Buy Dis-Chem below R30.50
    
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Short term Ideas 
 
  • Netcare: Sell above R32.50, level not yet reached.
  • Mediclinic: Up over 14%, place a take profit at R127.50. Increase Stop loss from R111.95 to 114.50.
  • MTN:  Trade closed at R130 for a 10.64% gain in there weeks.
  • Sibanye Stillwater: Stopped out at R10,73. 

Long Term Ideas      
 
  • Shoprite: Building support above R240.00.  Buy below R245.00. Target of R285.
  • Anglo: Hold for a break and rally above R300.00
  • Sasol: Up over 14%, increase target to R475.00, leave stop loss at R420.00 for 5% gain.
  • Aspen: Accumulate on weakness below R260.
  • Sygnia: Add below R12.50.
  • Santova: Buy below R3.00.
  • Merafe: Accumulate below R1.55.
  • Jubilee: A new deal in Zambia, will see buyers come in. Buy below       
  • MTN: Bullish results, looking for a break above R 135,00.
  • Glencore: Another dividend received. Hold
  • Wescoal: Long term buy. Add below R1.80
  • Naspers: Increase exposure below R3,000. 



One to buy as strong earnings bolster markets
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