Francois Joubert’s special situations small cap stock watchlist for 2023

This year I’d like to share some stocks on my ‘special situations’ watchlist.

These are companies that have lots of upside potential. But they have specific situations playing out that make it tricky to identify the best timing to buy into them.

So, let’s have a look at these stocks, and what I think about them.

This is my personal penny share special situations watchlist for 2023

Penny Share # 1 – York Timbers
York Timber has a net asset value of R9.52 vs a share price of 255c. So it has some serious growth potential.

It has also recently been targeted by a private company with shareholders that are actively working to improve the company through their seat on its board.
York recently had a rights offer, which will dilute its earnings and NAV in the short term.

But in the long term this money is being used so that the company can grow its trees in its plantations for a longer time before harvesting them.

If a tree is left three to five years longer from a 18-20 year age it can fetch up to DOUBLE the price when harvested. So the company wants to leave their own forests to grow a bit older and buy in more timber from other sources.

In the short term, it will put pressure on profitability. In the long term. the company will shoot the lights out.

This strategy could take 3 to 5 years to play out. I am still on the fence regarding timing to enter the stock. If the price was R2 today, instead of R2.50
I’d buy immediately. But at R2.50 I’m waiting it out a bit till the next results release. You can watch and be kept in the loop on when to buy by joining me here.

Penny Shares # 2 – Nampak
Nampak did a restructure some years ago, but the company was saddled with a fair bit of debt.

A lot of that debt is coming due for repayment this year. And the company technically needs to refinance this, or repay the banks the entire amount.

It attempted a rights offer to raise the capital to repay debt, but shareholders aren’t too excited about this.

So, the rights offer is hanging in the air at the moment.

The debt issues for the company need to be fixed before I want to buy.

That said, the company is highly profitable. And that’s part of the problem. It’s grown so rapidly, all its cashflows are going into financing more growth, which is why there’s a bit of a shortage of cash to repay debt. Also, it has a lot of cash tied up in Nigeria, which it is struggling to repatriate to SA.

Penny Shares #3 – Blue Label Telecoms
Blue Label bought Cell C some years ago.

The investment had lots of potential but has proven to be disastrous for the company. Despite investors being opposed to sinking more money into Cell C, management has decided to restructure Cell C, and put more money into it.

If the restructure works, and Cell C becomes profitable, it will be a major payday for Blue Label. If it doesn’t, the market will punish the company. I am keeping an eye on the company, and progress of this restructure before I am willing to make a move.

There’s a couple more stocks on this watchlist of mine…

Arcelor Mittal, Brait, Brimstone, Murray and Roberts and Kibo are all stocks I am interested in, but not yet convinced about buying, or waiting for a specific catalyst before I make the move…

If you want to know when they are good to buy then join me today, my offer is 100% risk-free for the next 12 months so what do you have to lose?

What I do know is there are plenty of other stocks we are capitalising on right now.  In fact, I just released my top five penny stocks to buy now and profit in 2023 which you can claim here.