ARTICLES

Aveng Opportunity

Over the past few years, we have consistently recommended Aveng (AEG) as an opportunity. Those who have followed our advice have more than doubled their money.

By the start of 2022, the company had substantially reduced its debt and completed a 500-for-1 consolidation. These two events have returned the share from being a marginal penny stock to being a solid institutional investment with good prospects. At this stage the company earns two-thirds of its income in Australia from its subsidiary McConnel Douglas – which makes it a rand hedge. In South Africa it has been benefiting from the increased profitability of mining companies as a result of the boom in commodity prices.

In its most recent financials for the year to 30^th June 2021, the company reported headline earnings per share (HEPS) of 2c – which translates to R10 per share after the consolidation. At its current price of R28.33, this puts the company on a price:earnings (P:E) multiple of just 2,83 – which is extraordinarily cheap for a profitable business of this sort which has a turnover of over R20bn per annum.

It has just completed its interim period for the six months to 31^st December 2021 and will probably report in February or March 2022. In the meantime, investors can look forward to a trading statement at some point in the next month or so which will give an indication of where the company expects its HEPS for the interim period to be.

In the meantime, it is worth watching the share’s price and volume charts to see if there is any accumulation of the share going on ahead of the results. Consider the chart:

This chart shows the progress of the share since the consolidation on 7th December 2021. The top chart is a standard candle stick; the middle chart is an on-balance-volume (OBV) chart; and the bottom chart is a volume histogram.

The OBV shows that the share is being steadily accumulated by the “smart money”. A lot of this is probably institutional buying as the fund managers return from their Christmas holidays and realise just how cheap this company really is. Overseas banks like JP Morgan, which now owns 22,45% and Bank of America which now owns 9,64% have been buying as much as they can lay their hands on. They are certainly alive to the fact that, at these prices, Aveng represents a screaming bargain.

So, once again, we suggest that you could do worse than add this share to your portfolio. If you already hold it, our recommendation is that you keep it and perhaps even add to your holding.

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

PDSNET ARTICLES

Bubble

Last Friday the S&P500 reached another new all-time record high, closing at 6791 and reaching a new intra-day record high of 6807. This is obviously an exciting time for private investors, but with each new record high the systematic risk of a bear trend or crash increases. Consider the chart:

The PEG Ratio

Since the government of national unity (GNU) came into power in June 2024, there has been a definite improvement in the South African economy. Perhaps the improvement is not as dramatic as some people were expecting, but the progress cannot be denied.

Possibly the best indicator of that is the 28% rise in the JSE Banking index which, before the GNU had

Rare Earth Elements

Investors worldwide had been of the opinion that Trump’s ability to impact markets was on the decline. His erratic, on-again, off again tariff policies had either disappeared or had been mostly discounted into share prices. His attack on the second largest economy in the world, China, seemed to have been largely resolved, and a meeting with

US Shutdown

There has been much in the media recently about the US government shutdown and the fear among investors that it might begin to affect the stock market, depending on how long it lasts.

A shutdown occurs when the US government reaches its budget limit and requires a bill to be passed through both Houses to extend the government’s spending limits.

New Listings

Two new companies, ASP Isotopes and Greencoat Renewables, have recently come to the JSE. Both are developing companies that have recently made losses and have been funding those losses by raising capital and selling assets. They both have substantial “blue sky” potential but also carry substantial investment risk. This is probably truer of ASP

Exponential Growth

The  S&P 500 index is important because all the stock markets around the world tend to follow it. If the S&P is in a bull trend then London, Tokyo and the JSE will also be in a bull trend – and vice versa.

The S&P500 index began 68 years ago on 4 th March 1957 with an initial value of 43,73. It took nearly

The US Jobs Market

International investors who trade on Wall Street are generally negative about any good news from the economy because it tends to make the monetary policy committee (MPC) more hawkish and less likely to reduce interest rates. The opposite is also true. But there comes a point where bad news is so bad that investors begin to fear that the US economy is heading

Jackson Hole

Once a year in late August central bankers and academics congregate in Jackson Hole to discuss the state of the economy and consider the way forward. Traditionally, the Chair of the Federal Reserve Bank (“the Fed”) addresses the meeting and gives direction to its thinking on monetary policy in the US. This year, the comments of Jerome Powell resulted in the

Choppies

Choppies is a supermarket chain which operates in Botswana, Namibia and Zambia. It is listed both on the Johannesburg Stock Exchange (JSE) and on the Botswana Stock Exchange (BSE). Notably, the company has resisted the temptation to re-enter the highly competitive and cut-throat retail market in South Africa, having exited that market in 2020 due to sustained losses. Despite

Gold Resistance

All investments throughout the world can be ranked on a scale from high risk to low risk. As a general rule, in the world of investment, risk and return rise together. In other words, as the risks in an investment increase, so does the return necessary to attract investors.

At the one end of the scale there are very low risk investments