Business Maverick's 2024 stock picks returned 20% – and now for our 2025 stock picks

Each year, the Business Maverick team puts their heads together to choose the 10 stocks we think are worth investing in over the next year.

Last December, we “invested” R100, R10 per stock, and ended the year on R120, with our portfolio up 20%. Not too shabby, if we do say so ourselves – considering the FTSE/JSE Top 40 Index had a return of about 12.72% in the same period.



Table compiled by Neesa Moodley

Who picked the winners and losers?

There were only two losers in 2024 and at a 1% loss, does Gold Fields really count as a loser? MTN, which was backed by both Tim Cohen and Ray Mahlaka, turned out to be the doozy of the bunch, sliding 20%. However, a diversified portfolio across industries meant we were positioned not only to absorb the hit, but to make a decent return.

2024 was the year of elections, and as such, a year of uncertainty for markets. However, South Africa has emerged relatively unscathed and, dare we say it, looking better than we did going into 2024.

We haven’t seen any load shedding in months (long enough that we have stopped counting the days), the elections saw a fairly peaceful transition from an ANC-majority government to a government of national unity (GNU), inflation is below the 3% mark and interest rates have started coming down (finally).

The GNU has raised optimism that policy reform implementation is finally going to gain momentum, pushing the country’s growth rate over 1% (as we so desperately need).

However, Sanisha Packirisamy, economist at Momentum, cautions that threats to the survival of the GNU could derail these expectations. “Other critical domestic risks that need to be monitored are South Africa’s crumbling water infrastructure, transport sector deficiencies and local government mismanagement,” she says.

“Insufficient progress on addressing these issues would keep South Africa’s country risk premium at elevated levels.”

And on that sombre note, these are the BM team’s 10 stock picks for 2025.

Neesa Moodley's choices:

Capitec 

The largest bank in the country, the one that the big four never saw coming. A Capitec pick is really a no-brainer – particularly when you factor in the massive growth the company is realising from its foray into the mobile virtual network operators (MVNO) space. Net income from data and airtime at Capitec Connect dialled up from R4-million last August to a whopping R69-million.

Chris Steward, sector head of financials, SA equity and multi-asset at Ninety One, points out that while most banks use the money from short-term savers to fund longer-term lending activities, retaining a relatively small portion for liquidity purposes, Capitec maintains a liquidity buffer of about 100%, meaning it could meet all its short-term liabilities through a combination of cash and other highly liquid instruments.

“Yet despite holding more capital than any of its peers, and taking this conservative stance on liquidity, Capitec has the highest return on equity of any bank in the country.

“Not only does this demonstrate its effectiveness in terms of deploying capital, but it also gives the bank further optionality to generate higher returns over time or return more value to customers, thereby unlocking further growth opportunities while maintaining similar returns,” he says.

Sanlam 

Sanlam was always one of the larger financial services companies in South Africa, but this blue giant has slowly and surely been expanding its footprint across Africa and even on other continents.

In February this year, chief executive Paul Hanratty signed off on a R6.5-billion deal to acquire smaller competitor Assupol. This was preceded by the SanlamAllianz joint venture, which has been pegged at a combined group equity value of about R35-billion.

SanlamAllianz began operations in September 2023 and Sanlam’s Lisp (linked investment service provider) platform, Glacier, took over Absa’s Lisp business in November 2023.

Halfway through 2024, Sanlam put R1.2-billion cash (upfront) on the table for a 60% stake in MultiChoice’s insurance business, NMS Insurance Services.

The idea was that this would give Sanlam and its affiliates the opportunity to cross-sell financial services products to Multi­Choice’s extensive and engaged subscriber base of 21 million households across 50 countries in Africa.

Opportunities outside South Africa will be facilitated through SanlamAllianz. The move will catapult Sanlam closer to its stated goal of reaching 50 million clients across the continent by next year.

More recently, Sanlam announced its intention to merge its investment management division with Ninety One. Andrew Bahlmann, chief executive of corporate and advisory at Deal Leaders International, says Sanlam’s strong presence in South Africa and its established channels could help Ninety One increase its footprint, particularly among clients in savings pools outside its current reach.

“This is a potential growth driver, particularly in a market where investment opportunities are often constrained by brand recognition and access to institutional channels,” he says.

Edward Mtsweni, an investment analyst at Camissa Asset Management, agrees, saying the synergy between the Sanlam and Ninety One teams should result in better asset management and improved returns, benefiting investors in the long term.

In India, Sanlam has chosen to partner with the Shriram Group, which has subsidiaries in the finance, life insurance and general insurance space.

“A path of carefully considered acquisitions and partnerships across Africa and India have positioned Sanlam well for long-term growth, particularly in underpenetrated markets,” Mtsweni says.

Harmony Gold

If my colleague Ed Stoddard was not on leave, I’m sure we would have more mining stocks in this portfolio. I’m choosing Harmony Gold for three reasons: as a nod to Ed, because the World Gold Council tells us that gold is poised for its best annual performance in a decade, and because, like any good Indian girl, I love gold jewellery.

According to the World Gold Council, the gold price has increased more than 28% year to date in US dollars, trading 22% higher on average during 2024 than during 2023. Gold reached 40 new record highs year to date and total gold demand in the third quarter surpassed $100-billion for the first time.

China and India are gold’s largest markets. More generally, Asia makes up more than 60% of annual demand (excluding central banks). Its contribution to performance can’t be understated.

“During 2024, Asian investors added to gold’s performance, particularly during the first half, and Indian demand benefited from the reduction in import duty in the second half.

“India seems to stand on a better footing. Economic growth remains above 6.5%, and any tariff increase will affect it less than other US trading partners given a much smaller trade deficit. This, in turn, could support gold consumer demand,” says the World Gold Outlook 2025 report from the World Gold Council.

Tim Cohen's choices:

Equites Property Fund

With interest rates coming down, investing in property is looking more attractive, and the question, of course, is whether all the upside isn’t already absorbed into the share. Still, you probably can’t go too far wrong investing in one of the big funds like Fortress Real Estate Investment Trust (Reit).

However, the standout share in this subsector has been Equites Property Fund, which has had a compound annual growth rate of 22.6% over a five-year period. That’s in the top five performances on the JSE.

Equites has three other advantages, apart from a great track record: it’s a great buyer of assets; it’s a logistics-focused Reit, which gives it a growth aspect; and it has assets in both South Africa and the UK, providing some hedging.

A Prosus flag is displayed ahead of the trading debut of the new Prosus NV unit of Naspers, outside the Amsterdam Stock Exchange, operated by Euronext NV, in Amsterdam, Netherlands, on 11 September 2019. (Photo: Jasper Juinen / Bloomberg via Getty Images

Prosus  and Naspers

Prosus’ most recent results somewhat demonstrated what this huge company is capable of, and there is a chance the promise the company has, well, promised, will finally be coming to fruition. New management is on board, and a new approach is visible, although whether they can turn this big, complex ship around remains an open question. But the first half of fiscal 2025 saw the e-commerce segment treble its adjusted earnings before interest and taxes, and the company is now projecting earnings of $400-million for its e-commerce operations in the current fiscal year, a substantial increase from the $38-million reported in fiscal year 2024.

These are big numbers, but of course the portfolio is huge. There is the prospect of listings of companies such as Meituan and Trip.com, which could generate up to $14.3-billion, potentially adding about $4.9-billion in value for shareholders. As an added bonus, Prosus’ biggest holding, its 26% stake in Chinese giant Tencent, is also looking healthy and has performed well in a somewhat disappointing Chinese market.

The problem with Prosus is that South Africans are generally already up to their ears in Prosus/Naspers shares. But if you happen for some reason to be light, the price-earnings ratio of about 11 and better prospects could make it a good choice.

Southern Sun

Sometimes the biggest test of companies is not when the wind is at your back, but when it comes from the front. Few companies were tested harder than Southern Sun during the Covid period, and it’s amazing the company stood up as well as it did.

The question now is whether all the bounce back is already in the share, but if tourist numbers are anything to go by, there is probably a bit to go.

Tourist numbers remain well below the peak of 2018, suggesting that the Cape Town hotels have more room to increase capacity or adjust prices higher to meet demand.

Southern Sun is one of stockbroker Anchor Capital’s picks for 2025, partly based on the expectation that group-wide occupancy is likely to rise above 62% next year from 58% a year ago, with each additional 1% of occupancy adding about R100-million to the company’s operating free cash flow. With a price-earnings ratio of 15, it’s not dirt cheap, but there is some room for growth. And because it’s debt-free, healthy dividends seem likely.

Ray Mahlaka's choices:

MTN; Vodacom and Telkom

My top stock choices for 2024 included MTN and Vodacom, two of South Africa’s biggest telecommunications companies. Over the past three years, Vodacom’s share price has been down 20% and MTN followed the same downward trend by 49%.

Although their share prices have been laggards, Vodacom and MTN are income stocks because they consistently pay dividends to their shareholders regardless of their financial position.

MTN and Vodacom have spent billions of rands on solar power, generators and batteries to keep their cellphone towers and networks running during Eskom blackouts.

With the energy crisis fading in South Africa (there have been no blackouts for more than eight months), Vodacom and MTN are preparing to redirect their investments and capital into growth initiatives.

The two mobile operators plan to roll out 4G and 5G services and bring compatible devices and routers into the country. The 4G and 5G services promise faster internet connectivity, easier access to information, and the ability to transfer large amounts of data across wireless networks. South Africa still relies heavily on much slower 3G services.

The move to 4G and 5G should give MTN and Vodacom a pipeline of new subscribers and chances of increasing their service revenue (the money that telecommunications companies make from things such as airtime usage and monthly access charges).

Commenting on MTN’s prospects, Aslam Dalvi, a portfolio manager at Camissa Asset Management, points out that there remains substantial growth potential in data usage across MTN’s markets, with only half of its customers currently using data services at less than 5GB of data per month on average – far below the 25GB average seen in developed markets.

The move to 4G and 5G will intensify competition between MTN and Vodacom for new customers, who are still facing a cost-of-living crisis and have limited disposable income for telecommunications.

Customers visit a phone store operated by Telkom at the Menlyn Park shopping center in Pretoria on 25 July 2017. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

A new addition to this basket is Telkom, another telecommunications company investing heavily in 4G and 5G. Telkom management believes that growth for the company will come from its mobile business and is deploying more capital to grow it.

The Telkom board suspended dividend payments in 2020 to preserve cash in the company and to fund initiatives to make its network resilient against Eskom blackouts.

Although the policy of paying dividends has been reinstated, payment has not yet resumed. Telkom’s financial performance has improved and 2025 might be the year in which shareholders start seeing dividends again. DM

This story first appeared in our weekly DM168 newspaper, available countrywide for R35.