HomeHome SearchSearch MenuMenu Our productsOur products

Why this JSE stock is on my “BUY” list!

by , 12 May 2022
Why this JSE stock is on my “BUY” list!
Uber is one of the most amazing success stories in recent history.

As I write this the company is worth $88 billion today. But it doesn't own any vehicles. And it doesn't pay salaries to employees.

In fact - the company is estimated to have between 3 and 4 million drivers around the world.

Yet the company doesn't have a fraction of the overheads a business with 3 million employees would have…

Simply put - it doesn't pay a cent, if its drivers don't work.

It doesn't have to pay annual or sick leave. It doesn't need a massive HR department, nor does it need to run a payroll.

Uber focusses on what it's good at. Supplying transport services to the public, and a business opportunity to taxi drivers.

A tiny JSE listed company adopted this business model during the recent pandemic related lockdowns.

It is a property development company. But it doesn’t have thousands of builders on its payroll. It doesn’t own a fleet of construction equipment that it needs to maintain. Yet it develops thousands of homes a year – on demand.

The higher demand is, the more homes it can build and sell, while if there’s a slowdown it can cut down construction to the bare bones – without sitting with retrenchment costs or high overheads!

 

***advertisement***

Do you have a pen and paper handy?

I’m going to detail three stocks I’ve identified with this technique that could be big winners in the months ahead...
 
I’m going to discuss how you can use this approach for yourself...And I’ve got a number of additional bonuses that I want to share with you today.
 

So, let’s get started.

******

How Covid initiated a massive turnaround for this company
As South Africa was plunged into lockdown in 2020 Calgro M3 (JSE: CGR) was already struggling.

The company quickly realised that if it didn’t change its business model – it would go under.

So, that’s what it did. Outsourcing the physical construction function to contractors, and disposing of its rental property portfolio.

Like Uber – the business is now light on assets, and light on overheads.

And thanks to these changes in 2020 – profits are soaring right now.

You see…

Calgro M3 released a trading statement for its results ending February 2022.

The company expects earnings to come in around 104.87cps compared to a 15cps loss in the previous year.

It completed building 2,685 units during the year to achieve these results.

It currently has 4,583 units under construction, so 2022/2023 should be an even better year. It can nearly double its performance in the coming year.

Based on its latest earnings the stock trades at a PE ratio of only 3.81.

So, its share price could triple before it hits a double-digit price earnings ratio.

In terms of cashflow – the company generated R129 million in cash from operations for the year. That’s roughly a quarter of the company’s entire
market value.

It has a bank balance of R191 million, and sits with R400 million in undrawn facilities with the bank. That means there’s ample opportunity for it to grow from here. Building more units – given the demand for them means it can sell a lot more than in 2020 and 2021…

 

***recommended***

Top 5 Big Income Stocks for 2021 [FREE]

Today, I'm giving you my top five Big Income stocks for 2022... completely free of charge.
 
You'll discover...

  • The safest 9% income yield in the market
     
  • My top five "Big Income" Small Cap Stocks, which could supercharge your dividends
     
  • And my No. 1 Small Cap stock for a LIFETIME of income.

Click here to get the names and ticker symbols now before the download link expires.

******

What’s the upside?
Well – at a 104cps you’d expect a share price of around R10 – still putting the stock on a PE ratio of below 10.

What’s more – the current share price is 396.

So, the upside potential is easily 152% on the current share price.

The stock’s 5 year high was R18.50 – with May 2018 results reporting 90cps profits.

Today profits are more than 10% higher than back then – but instead of an R18 share price its sitting at less than R4…

To say there’s upside potential is an understatement…


PS. If you want to know which five stocks offer the best value on the JSE right now, then read my latest report.



Why this JSE stock is on my “BUY” list!
Rate this article    
Note: 4.11 of 9 votes

Related articles



Related articles




Trending Topics