Why having these two stocks in your portfolio is your best chance to grow your wealth
Over the past week, two of the most heavily bought JSE shares by foreigners were PSG and Capitec.
This isn't a surprise as both these stocks have been on a tremendous run this year. Since around January, both companies have soared over 50% in six months.
So with the added confidence from foreign investors, this should see both stocks continue on an upward trend.
This is good news if you hold both these stocks in your portfolio. Despite strong runs from both companies, there's still a robust demand from foreign investors.
Niche financial services stocks is where the money is heading
The interesting part to all this is that broad based insurers like Old Mutual, Sanlam and Discovery were sold off by foreign investors, notes MoneyWeb.
Sanlam is down 10% in the last two weeks with Old Mutual dropping 6%.
This means foreign investors are looking towards capitalising in the niche financial services industry – like PSG.
While broader financial services companies have struggled this year, PSG’s return to date is 64% and Capitec is 60%.
The growth over the last five years from both stocks has been tremendous with triple-digit returns.
You see both companies each contributes to each other. Capitec remains PSG Group’s largest investment, comprising 41% of the Sum-of-the-parts value’s total assets.
The high contribution saw a 123% increase in Capitec's share price and an increase in PSG Group’s direct interest in Capitec.
Capitec also continues to do its part for PSG. PSG’s recurring headline earnings per share grew 26% in the period under review.
Not to mention, PSG’s investments in Curro Holdings and Zeder will also drive the company’s growth even higher.
The best thing to do is ride with the trend
The JSE is on a slippery slope right now and who knows which stocks to buy or sell.
But what I do believe is PSG and Capitec are two solid stocks that show massive growth is still ahead.
Both have triumphed in The South African Investor and Stock of the Month portfolios and I believe there are still gains to be made.
So if you have Capitec and PSG in your portfolio, then definitely hold onto them.
If not, there still might be a good opportunity to get in. Capitec’s share price dropped 9% in a week and is now sitting around R485. If it continues to fall this could present a great time to buy.
PSG is definitely a favourite stock, it continues to shine and will no doubt further its success.