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How to spot the winners among the small-to-medium sized companies on the JSE

10 February 2021 8:51 PM
Tags:
JSE
The Money Show
Bruce Whitfield
Stock market
Personal finance
investing
listed companies
Small Talk Daily
Anthony Clark
Investment School

Small Talk Daily's Anthony Clark has expert advice on investing in the small to medium-cap sector and avoiding the pitfalls.

Looking at investing in the stock market?

There's new life in many of the smaller companies listed on the JSE.

Bruce Whitfield interviews an analyst who's been looking into investment opportunities in this sector for over 25 years.

Small Talk Daily's Anthony Clark covers around 100 stocks in the small- to mid-cap industrial and financial space - that's from R200 million to R40 billion.

What actually defines a small or mid-cap company?

It's a very subjective value. I tend to to use the metric, anything below R2 billion is a small cap and anything below R1 billion is a micro cap. Anything above R2-R3 billion becomes a mid-cap, just going up to a bigger quality mid-cap.

Anthony Clark, Analyst - Small Talk Daily

There are examples like Naspers which started out as a small company and is now one of the biggest on the JSE.

"Most people forget, from little acorns mighty oaks will grow" comments Clark.

At one stage every large company started off as an embryonic small company and grew over time!

Anthony Clark, Analyst - Small Talk Daily

I first picked up the coverage of Cashbuild - the well-known national building retailer - back in May 1996. It was trading at R3.53 a share!

Anthony Clark, Analyst - Small Talk Daily

Today, Cashbuild's value is nearly R8 billion. The share price is trading at a new 52-week high of nearly R300 and it's a nationwide building materials company!

Anthony Clark, Analyst - Small Talk Daily

How many frogs did you have to kiss to find the likes of the Cashbuilds or the Capitecs?

Bruce Whitfield, The Money Show host

For every great company, there are always a couple that go bust notes Clark.

Even once-large companies like Murray & Roberts have become small companies....

Anthony Clark, Analyst - Small Talk Daily

There are the frogs, but there are plenty of diamonds out there. You've got to scratch through the dirt to find them.

Anthony Clark, Analyst - Small Talk Daily

How does a potential investor go about finding the "diamonds"?

You have to do a lot more work to understand a small company than a larger one, for which there's tons of analysis and information available Clark says.

You have to physically follow the nuances of these small to mid-cap companies and not rely on what is presented to you in annual reports and presentations.

Anthony Clark, Analyst - Small Talk Daily

I would advise everyone: 'Kick the tyres', visit companies and more importantly, attend annual general meetings - they are a font of knowledge.

Anthony Clark, Analyst - Small Talk Daily

In many cases in the last couple of months, an independent analyst who actually does the legwork and has relationships, can beat the big boys at their game day in and day out!

Anthony Clark, Analyst - Small Talk Daily

You can follow Clark on Twitter @smalltalkdaily.

Listen to more expert advice in the audio below:


This article first appeared on 702 : How to spot the winners among the small-to-medium sized companies on the JSE




10 February 2021 8:51 PM
Tags:
JSE
The Money Show
Bruce Whitfield
Stock market
Personal finance
investing
listed companies
Small Talk Daily
Anthony Clark
Investment School

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