The past four or five months have been incredibly rewarding for JSE investors. A revival of investor sentiment and confidence in SA has helped the JSE All Share, Small Cap Index and small caps in general to hit new all-time highs this year.
And some of the biggest JSE-listed companies have benefitted such as Naspers and Prosus. Both company’s share prices have risen around 30% in 2024. Now, a 30% return sounds great but when you look at the small cap sector of the JSE, you’ll find small caps have outperformed the JSE-giants by a HUGE margin.
Here’s just a few of the big hitters so far in 2024…
• Kore Potash is up 293%
• Stefanutti Stocks is up 246%
• Nampak is up 133% (in Red Hot Penny Share portfolio)
• Pan Af is up 100% (also in Red Hot Penny Shares portfolio)
The truth is it’s not just JSE small caps that are crushing it, the whole JSE has been on fire. And we think there is plenty more to come.
Just take a look at these two small cap companies.
#1: Calgro (JSE: CGR) – Low-cost housing and memorial park developer
Calgro is not your ordinary construction company.
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 and memorial parks a year – on demand.
At the beginning of the year, Calgro boasted a total construction revenue pipeline of R18 billion.
Today, it’s revenue pipeline is DOUBLE after Calgro entered a joint venture with Eris Property Group for the hugely ambitious Bankenveld District City development.
In other words, Calgro’s future growth potential is massive.
Even better, its shares are still extremely cheap on a valuation basis (a PE just over 3) – and that’s even after a +57% rise in 2024.
Better yet, with a share price of 690c, Calgro still trades at a huge discount to its NAV per share of 11429c.
Simply put, a company sitting on a PE of 3, growing profits by 20%-30%, is just too good to ignore.
#2: Frontier Transport Holdings (JSE: FTH) – The 163-year-old transport specialist
Frontier has been around for 163 years with a portfolio rooted in the commuter bus and luxury coach segments.
For example, it owns Golden Arrow Bus Services (GABS), which transports 56 million passengers annually. That’s around 220,000 passengers per day.
It also owns Table Bay Rapid Transit service, Sibanye Bus Services, Shuttle Up, and others. And it’s a profitable business!
In the company’s half year financial results, revenue grew by 18.6% to just over R1.479 billion. Meanwhile headline earnings came in at 58.81cps.
That means Frontier trades on a PE of 5.5 today.
And if that doesn’t excite you enough…Calgro is cash-flush, holding just under 20% of its market cap in cash. And it pays an inflation-beating dividend yield!
Next year Frontier will receive 120 electric busses. This could save on diesel costs and ultimately, boost profits.
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