This week I explored the JSE’s worst penny stocks…

Which ones will likely go out of business. The worst of the listed companies. The ones making losses, with high levels of debt and unlikely to turn things around any time soon…

I picked three stocks that you should definitely avoid this year!

If you’re looking for great income from your stocks this year, then you need to invest in these top five dividend paying stocks on the JSE.

Don’t touch Labat Africa…

Clearly Cannabis isn’t as hot as originally touted!

In the US cannabis companies have taken a beating, as investing in these businesses just hasn’t paid off.

It might sound like an attractive idea, but it seems this is a much tougher market to crack than many have thought.

Labat Africa’s own CEO stated: “There could be a number of reasons [for the share price falling]. I’m not going to pay a lot of money to find out what the reasons are, but the market in South Africa hasn’t really taken to cannabis yet”.

The company’s maiden final results following its financial year change saw it report a R36.9 million operating loss, bringing in a headline loss per share to 6.6c. The company’s market value is R67 million and its total liabilities come in at a whopping R121 million – nearly double what it is worth!

While the share price is up 10% in the past month – I’d be very wary of buying into it right now.

This healthcare company’s operations need a lifeline

Advanced Health is a healthcare company that operates day clinics.

It’s very profitable in Australia, and tried replicating that business in South Africa – but it simply hasn’t been able to become profitable yet.

In its latest financials, the company reported a profit after tax of R62 million in Australia, but its South African operations dragged the business down with an after tax loss of R41 million.

The company has R294.8 million in accumulated losses, and has negative cashflows. The company’s current liabilities exceed its current assets. Simply put it is at risk of bankruptcy.

Its Soweto Day Hospital was put into liquidation in August 2022. The stock has soared 132% in the past three months. But it is sitting on a Net Asset Value of 3.8cps compared to a 58c share price, making losses and has loads of debt.

If it sells its Australian operations, it could raise a tidy sum of cash – but this is like selling the goose that lays the golden eggs, and the business will be left with loss making businesses.

Steinhoff remains a NO GO ZONE

Despite my warnings that Steinhoff is not something I’d touch back in 2022, I still receive many investors queries regarding the recovery potential of the stock.

My answer remains the same. Stay away.

The company is so badly tainted by the frauds of Markus Jooste, and is saddled with so much debt and legal issues that there’s not much of an investment here. There are far better opportunities on the JSE to make money that you don’t need to take this risk.

Steinhoff’s 1 year return is -89%.

The company’s June 2022 results showed a headline loss per share of EUR11.6c. The company’s debt and liabilities far exceed its market value.

Simply put – I wouldn’t even call it an investment. Sure, you can speculate on it. But the risk remains, it is not a share I would touch.

If you want to know what I’m buying this year with a view to double my investment in the next 12 months, then go here! 

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