ALTHOUGH there are buying opportunities on the JSE, investors must make sure they understand the long-term fundamental strength of industries and separate this from market sentiment, he says.

Finding company stocks or sectors that represent good value is difficult, as the JSE is expensive compared with its emerging-market peers - and even more pricey than its developed-market counterparts, he says.

This week, the All Share index closed above 35000 for the first time in its 17-year history. Despite this, Chester and Ambekar say there are still cash-generative businesses on the JSE that are undervalued.

Diversified commodity players such as Anglo American have been singled out as being out of favour, but with a strong chance of recovery.

Anglo is poised to increase long-term production, says Chester. Although the miner blundered by making expensive acquisitions at the top of the cycle, the business is well diversified, "which in itself is worth a premium".

Ambekar singles out MTN for its continued ability to generate cash. "We like MTN very much for its geographic spread, its leading market positions in high-growth, low-penetration regions," she says.

Although Anglo and MTN are traditional blue chips, investors have given them the cold shoulder as a result of the barrage of bad news surrounding them. This calls for investors to look beyond the headlines and to zero in on profit drivers, says Chester.

He warns investors not to go against the grain for the sake of being contrarian. "Some people believe being contrarian is an investment philosophy, but we believe in valuations as a key driver of our philosophy."