Stocks By Mom

The trading update from ArcelorMittal, yesterday, got tongues wagging and, for once, it was for good reason. ArcelorMittal’s HEPS is expected to improve by more than 100% for the year ended 31 December 2021. After showing decade losses and crippling debt, the institutional investors tossed it in the pile of mounting penny stocks. As a retail investor, you really had to go scrounging around to find information and insight into the company, as most stopped reporting on it and previous annual reports painted a further depressing picture. It was difficult to build an investment case for ArcelorMittal, until I realised the business model for ArcelorMittal is entirely linked to the PRICE of steel. Which price of steel? Let’s not go there…it is difficult to get answers from analysts…because it is complicated.  Let’s stick to basics, Economics 101: China is the largest producer of steel.  Last year, China announced a total abolition of export rebates (13% on VAT) with effect from May ...

 We have all watched those makeover shows where some random, frumpy, fifty-year-old woman is yanked off the streets into a swanky studio, attacked by an army of stylists and emerges as a sleek, gorgeous lass. Nampak is the stock that comes to mind that has had the same lustrous turnaround even if it is still wearing a pair of spanx to contain the bulge of debt.  It has managed to cut costs, shed and sell businesses, turn a profit through the successful DivFood restructuring, capitalise on glass shortages and expand into developed markets. This turnaround has not been easy and still continues under difficult conditions but Nampak has emerged to become a better company. It may never reach its glory of becoming a blue chip again but I do feel it is a company that can still unlock some value.  Here are my insights on how Nampak has repackaged and positioned itself to tackle the new financial year: Company overview of Nampak Ltd

Two days, four trading updates from the retailers: Woolworths, Truworths, The Foschini Group and Mr Price.  I waded through the results of each retailer, comparing turnovers and HEPS, nodding in agreement as  they brought up the impediments of lockdowns and social unrest during their difficult trading period. That is what an investor comes to expect from a quarterly / six-month update. But Mr Price took it a step further… Mr Price management’s proudly acknowledged and appreciated its staff, thanking in particular its “frontline store and supply chain staff whose dedication to making the customer shopping experience safe and satisfying”.  These last two years have been hard, damn hard. Staff have lost family members and colleagues to COVID. They have lived through the trauma of the July social unrest and carry the burden of their personal problems but show up everyday to serve customers with a smile, albeit behind a mask.  Employees are the real competitive advantage ...

Shoprite stealthily built a strategy around the humble lettuce, years ago, declaring "anything fresher is still growing". Do you remember THAT Checkers ad? Yeah, we all scoffed.    No one could beat Woolworths superior quality and customers happily paid a premium for their groceries.   Fast forward to this morning, when I opened up Woolworths’ trading update and for the 26 weeks ended 26 December 2021 HEPS is expected to plummet between -30% to -40%.    Woolworths Food is struggling to attain its high margins by absorbing price increases as it states, "Sales in comparable stores grew 2.8% with price movement of 2.6% and underlying inflation of 3.7%".   Woolworths FBH business "grew turnover and concession sales by 4.2% and by 4.7% in comparable stores". Don't get too excited... this was off a low base. Trading momentum has since slowed the last six weeks and looks like their athleisure merchandise was a big miss with their female consum...

I call Merafe the pot luck share because the more pots and pans that get sold, the more  fortunate the company becomes; because the whole investment case for Merafe centers around stainless steel.  Why? Ferrochrome is the secret ingredient used in the production of stainless steel to make it shiny and corrosion resistant...and Merafe Resources Limited produces lots of it! When there is robust global economic conditions, stainless steel demand soars pulling ferrochrome prices with it and that is the time as an investor you climb onto Merafe's coat tails and go along for the ride. But one could argue that with COVID-19 and worldwide lockdowns, global economic conditions have been in the slumps. Why is stainless steel doing so well? Stainless steel does extremely well in consumer based economies, as it is used more in consumer products. With people staying at home, the last two years, there has been a higher demand and consumption  of goods. When an economy shifts to in...