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Momentum improves as the JSE rises 3.6% - One to buy and One to Sell

by , 21 September 2017
Momentum improves as the JSE rises 3.6% - One to buy and One to Sell
Before we jump into what the market did and what you should look out for this week, I would like to mention a few interesting retirement articles you should consider reading.

This week's Business Times had some excellent articles by Laura du Preez on Retirement Planning, take note of the following:
 
  1. New disclosure of RA costs is highlighting rampant abuse in this area
  2. How a conservative strategy can cost you a fortune
  3. Longevity and new thinking on Retirement

Each of these articles talks to a topic we have covered in the last year. Changes in the law will highlight the devastation costs you'll pay on your retirement savings. Speak to us about bringing your costs down, in most cases we can reduce costs by more than 50%!
 
Now let’s look at what the JSE did last week and what opportunities are lining up…
 
Last week’s biggest gainer was Naspers at 9.6%, which boosted the JSE’s Top40 index by 1.97%.
 
This was even as the Rand strengthened 2.6% against the US Dollar as the USD weakens further. The market will be eyeing Wednesday’s CPI data release and the interest rate announcement on Thursday for guidance on where to for the Rand from here.
 
The Mining Charter has been put on the back burner for now, this should result in small boost in confidence for resources. The most oversold resource stocks are Northam, Kumba and DRDGold with high negative standard deviations, so a strong rebound could be on the cards for them.
 
Last week’s movers and shakers…
  • Best Performers: Naspers 9.6%, Mr Price 8.7%, Murry & Roberts 7.2%, Grindrod 7.1%, Assore 7% and PSG 6.8%
     
  • Worst Performers: Implats -3.9%, Datatec -3.5% and DRDGold -3.5%
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One to Buy
 
Profits on the Horizon for this telecoms company
 
After the market closed on Friday, MTN sent a very positive SENS announcement. Management expects a rise of at least 20.% in both headline EPS and EPS for the first half of the 2017 results.
 
The negative performance in the prior year was mainly due to non-recurring costs, including the Nigeria regulatory fine of 474 cents per share (cps), professional fees related to the fine of 73 cps and losses of 136 cps from MTN’s 51% equity interest in Nigeria Tower InterCo B.V. mainly due to unrealised losses on US dollar-denominated loans. Buy below R125.00
 
One to Sell
 
Avoid this telecoms  - its price rally is unsustainable
 
Shares in Vodacom have jump 15% in two months from R152 in May to R174 this week. The company will release its first quarter trading update on Thursday. Operations have been performing well but voice revenue remains under pressure and the Rand strength will suppress international earnings in Rand terms.
 
The share is now significantly overbought, with a Standard Deviation (SD) of 2.4 times, a retracement is highly probable, we suggest you use this rally to switch into MTN.
 
  
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Update
 
Shorter Term Ideas 
 
Sasol: Increase stop loss to R367.50 to limit risk. Target R407.50.
 
PSG: Place stop loss at R240 to lock in a 4.26% gain. Target R260.
 
Sibanye Gold: Trading Sideways. Buy below R15.00. Hold.
 
Long Term Ideas       
 
Coronation: Moving higher, Accumulate below R65.
 
Invicta: Buy Below R52.50 and wait for a rally.
 
HyProp: Sell at R120. Trend is negative.
 
Glencore: Buy below R52.50.
 
DBXEU: Improving sentiment in Europe. Accumulate below R52.50.
 
Wescoal: Long term buy. Add below R2.15.
 
Famous Brands: At support – add below R125.
 
Naspers: We are well into profit on this position. Hold.
 
Tongaat: Bounced nicely, longer term target of R170.
 
MediClinic: Buy below R130.
 
Richemont: Maintain long position at R108.
 
Massmart: Sales update is better than previous period but the devil is in the detail. Results due 24 August. Accumulate below R110.00.
 
Tiger Brands: Moving in the right direction. Hold. 
 
(This article is an extract from Prodigy’s weekly Investor Digest. For more information contact Gavin McCarter on gavin@prodigyam.co.za.
 
 


Momentum improves as the JSE rises 3.6% - One to buy and One to Sell
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