IT WOULD have been easy to miss the Nedbank 2012 Xmas Stocking when it was first published at the end of last year. It hit the streets when most of us were in that mad scramble to get everything done in time to go away and do nothing. But missing the 10 stock picks that Nedbank Private Wealth Stockbroking recommends to its clients at the end of every year is indeed a pity.
Had you invested in the companies included in the bank’s 2011 Xmas Stocking, for example, you would have been rewarded with a return in excess of 34% last year.
"Which we are obviously very proud of," says . "Our challenge now is to present to you our top picks for 2013."
"We start with Foschini," says Rogan. "Foschini, we do believe is cheap relative to its retail peers. It’s got a bit of catch-up to do in terms of store optimisation and that will have a direct impact on margin growth, so that is our pick in the retail sector.
Next on the list is MTN. "We all know MTN. It recently released its new subscriber numbers and it is knocking on almost 25-million subscribers, obviously an African story and a great dividend payer."
Moving on to Pan African Resources, he said: "We feel it necessary to have a resource counter in the stocking and this has direct exposure to gold so it’s a play on gold, and we like the management of this company and it is set to resume dividends in 2013, so that does talk to the strength of the balance sheet.
"Ellies is a small company that is involved in renewable energy and consumable electrical products, so mainly import and distribute electrical products, but it is also a great African story and one that we believe has legs.
"Clover is our next pick, a defensive play, a company that listed recently on the JSE but that really is moving into a growth phase. It’s moved away from just being involved in milk and is involved in other value-added products, and we are going to see the benefits of that counter.
"We believe that it is going to be quite a tough year economically ... it’s important to look at some companies that are going to give you a sweetener when it comes to income, and we picked two property companies, Dipula and Ascension A. Both have good-quality books and, in fact, Ascension A has a guaranteed distribution so those two companies are both good for income.
"Some of you may not have heard of Mpact. It was unbundled out of Mondi and is involved in paper and packaging, particularly cardboard boxes. A good defensive counter, trading at a 30% discount to its peers.
"Then there’s Bidvest. We all know Bidvest, a massive global conglomerate, employing more than 100,000 people, but a very acquisitive company and we believe its earnings are sustainable going forward.
"And finally, Iliad. It supplies building materials to the industry and again, it does look expensive relative to its peers, but if you look going forward, it is one of the cheapest counters in the sector."
Anyone wanting to replicate the Nedbank portfolio — and it is as good a piece of investment advice as most of us are likely ever to get — will be wondering whether there is a significant premium on the price they would have paid at the beginning of the year, given that the all-share index, which started the year at 39,560, touched a high of 40,604 on Friday — an increase of 2.6% in three weeks.
So we did the sums and here is what we found: assuming you would have been willing to spend up to R10,000 on each of the 10 counters at their opening price on January 2 (for example, you would have bought 45 Bidvest shares at R219 as opposed to 46, which would have cost R10,074), the Nedbank Xmas Stocking would have cost you a total of R99,545 at the start of the year.
At close on Friday, the same portfolio would have cost R100,960 — an increase of 1.4%, with the contribution from the better performers in the pack being negated by the poorer performers.
Ellies, the best performer to date, for example, having risen 17% from 785c to 920c a share, was negated by Foschini, the worst performer, whose price fell 12%, from R141 to R124 a share.
The 15% increase in the Pan-African share price likewise was cancelled out by the drop in the Dipula (8%), Iliad (2%), MTN (1.5%) and Ascension (1%) share prices.
Bidvest, meanwhile, remained unchanged at R22, leaving it up to Clover, which increased in price by 6%, to get the Nedbank picks off to a decent start.