10 Best African Stocks to Buy Now

by MMC
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In this article, we will discuss the 10 best African stocks to buy now. If you want to skip our discussion on Africa’s economic outlook, head straight to 5 Best African Stocks to Buy Now.

In the current period of rising interest rates and high inflation in developed countries, emerging markets offer investors an attractive opportunity to diversify their portfolios. Emerging markets are growing rapidly as they have an increasingly young population and the emergence of a middle class with significant disposable income. Africa is an emerging market that deserves a closer look. The size of the African economy amounts to $2.96 trillion in 2022 and is experiencing strong growth. According to According to the International Monetary Fund (IMF), the Sub-Saharan Africa region is expected to record annual GDP growth of 3.6% in 2022 and 3.7% in 2023. On the other hand, if we look at economic forecasts for a developed economy like the United States, the Organization for Economic Co-operation and Development (OECD) predicts that the American economy will grow by only 1.8% in 2022. Moreover, with the possibility of a mild recession, GDP growth forecasts for the United States stand at 0.5% in 2023.

Africa has the youngest population in the world, with an average age of 18 compared to 30 for other continents. Furthermore, the continent is home to 313 million people belonging to the middle class. Over the past three decades, the middle class population has tripled and represents 34% of the continent’s total population, according to a report. issued by the African Development Bank (AfDB). Some of the major African countries with booming economies are Algeria, Egypt, Kenya, Morocco, Nigeria and South Africa. These economies act as economic hubs for the underdeveloped regions surrounding them.

Strong economic outlook

The emerging markets investment strategy focuses on companies that meet the needs of the growing middle class with decent purchasing power. Usually, companies that meet these needs belong to the raw materials, infrastructure and technology sectors. It should be noted that although emerging markets offer higher growth potential, they also carry higher risks. Africa is subject to economic and political uncertainty. There are still concerns about weak governance, transparency and regulation. However, this risk can be countered by diversifying investments in different countries and sectors across the continent.

Expanding access to technology across the continent will also provide an important boost to strong growth prospects. The sub-Saharan region of Africa is expected to have 613 million mobile subscribers by 2025, up from 515 million in 2021, reflecting a compound annual growth rate (CAGR) of 4.5%. This would cover 50% of the population compared to 46% in 2021. More than half of these connections would provide access to 3G internet solutions. Meanwhile, a third would provide access to 4G internet connectivity. Additionally, smartphone penetration is expected increase from 49% in 2021 to 61% by 2025. Top African stocks capitalizing on emerging trends and infrastructure development in the region include Kosmos Energy Ltd. (NYSE:KOS), Sibanye Stillwater Limited (NYSE:SBSW) and IHS Holding Limited (NYSE:IHS).

Source: PixaBay

Source: PixaBay

Our methodology

We looked at the growth prospects, business fundamentals, and analyst ratings of these companies. These stocks provide significant exposure to various sectors of the African economy. Given the African region’s positive growth outlook, these stocks should offer decent upside potential for long-term investors. We ranked these stocks in terms of hedge fund ownership as of Q3 2022.

10 Best African Stocks to Buy Now

10. Impala Platinum Holdings Limited (OTC: IMPUY)

Number of hedge fund holders: N/A

Impala Platinum Holdings Limited (OTC: IMPUY) is a parent company based in Johannesburg, South Africa. The company has numerous entities that conduct mining operations with a focus on the production of platinum and other metals such as cobalt, copper, nickel, palladium and rhodium.

Investec’s Nkateko Mathonsi upgraded Impala Platinum Holdings Limited (OTC: IMPUY) stock from Hold to Buy with a price target of $12.34 on September 30. South Africa is responsible for the global production of 80% of rhodium and a third of the world’s rhodium. palladium. Experts consider Impala Platinum Holdings Limited (OTC: IMPUY) in a strong financial and operational position with a fair valuation.

Additionally, Impala Platinum Holdings Limited (OTC: IMPUY) received a boost after regulators in South Africa gave the company the green light to acquire Royal Bafokeng Platinum. However, certain conditions must be met to finalize the acquisition. The deal will create one of the largest Platinum Group companies in the world, making Impala Platinum Holdings Limited (OTC: IMPUY) one of the best African stocks to own for the long term.

9. MiX Telematics Limited (NYSE:MIX)

Number of hedge fund holders: 3

MiX Telematics Limited (NYSE: MIXT) is a Stellenbosch, South Africa-based company that uses the power of Software as a Service (SaaS) to provide telematics solutions related to vehicle tracking and fleet management to its customers in more than 120 countries. .

Experts believe that the telematics industry is still in its infancy and has enormous market potential. According to estimates, there are 216 million commercial vehicles worldwide that can generate annual revenues of $91 billion for the telematics industry. Additionally, 80% of the industry remains unpenetrated. MiX Telematics Limited (NYSE: MIXT) has a long-term goal of achieving 20% ​​annual recurring revenue (ARR) growth and increasing annual subscription growth from 15% to 18%. MiX Telematics Limited (NYSE: MIXT) already has a healthy gross profit margin of 63.8% and intends to increase it to 70% in the long term. Analysts consider MiX Telematics Limited (NYSE: MIXT) as one of the best African stocks as the telematics sector offers substantial room for expansion.

As of Q3 2022, MiX Telematics Limited (NYSE: MIXT) was owned by 3 hedge funds.

8. DRDGOLD Limited (NYSE:DRD)

Number of hedge fund holders: 5

DRDGOLD Limited (NYSE:DRD) is a Roodepoort, South Africa-based gold producer transitioning from deep underground mining to more environmentally sustainable reprocessing of mine dumps and tailings dams. The tailings process is more environmentally sustainable because it uses gray water, thereby reducing the use of fresh water.

DRDGOLD Limited (NYSE:DRD) is facing challenges such as falling gold prices and load shedding in South Africa. However, the company has a strong cash position which will help it weather the impact of falling gold prices. Experts consider DRDGOLD Limited (NYSE:DRD) a stable gold producer. Additionally, DRDGOLD Limited (NYSE: DRD) offers an attractive forward dividend yield of 6.65% as of November 25. Going forward, the company intends to focus on Ergo and Far West Gold Recoveries (FWGR) to boost production and take the company into the next phase of growth.

As of Q3 2022, DRDGOLD Limited (NYSE:DRD) was owned by 5 hedge funds.

7. Sasol Limited (NYSE:SSL)

Number of hedge fund holders: 6

Sasol Limited (NYSE: SSL) is a diversified chemicals and energy company based in Sandton, South Africa, founded in 1950. The company has operations in 22 countries.

Experts predict that Sasol Limited (NYSE: SSL) will benefit from strong price dynamics in the chemicals and energy sectors. The company is experiencing better-than-expected cash flow growth and is making its holdings efficient through asset sales. Like some of the other stocks on the list, Sasol Limited (NYSE: SSL) offers an attractive forward dividend yield of 4.76% as of November 25. The company intends to issue a bond worth $750 million to refinance its debt and conduct broader business activities. . The bond will mature in 2027. Sasol Limited (NYSE: SSL) is also working to finalize an agreement to purchase 600 megawatts (MW) of renewable energy for its facilities. The move will be in line with the company’s goal to reduce its greenhouse gas (GHG) emissions by up to 30% by 2030.

Citadelle Investment Group increased its stake in Sasol Limited (NYSE: SSL) by 816% during the third quarter of the year.

6. Jumia Technologies AG (NYSE:JMIA)

Number of hedge fund holders: 8

Jumia Technologies AG (NYSE: JMIA) is a Lagos, Nigeria-based company with a presence in 11 African countries through its e-commerce platform. The e-commerce platform includes a marketplace bringing together thousands of buyers and sellers and is also integrated with digital payment and logistics solutions.

Jumia Technologies AG (NYSE: JMIA) became the first African technology unicorn company to list on the NYSE in 2019. Experts have called Jumia Technologies AG (NYSE: JMIA) the “Amazon of Africa”. The company underwent a restructuring effort that required the expulsion of co-CEOs, the introduction of new management and other measures aimed at ensuring the company reached profitability. Jumia Technologies AG (NYSE: JMIA) intends to remove non-performing businesses from its portfolio and reduce marketing spending. Analysts believe that Jumia Technologies AG (NYSE:JMIA) stock can offer investors strong upside potential, making it one of the best African stocks to hold for the long term.

Of the 920 hedge funds in Insider Monkey’s database, Jumia Technologies AG (NYSE: JMIA) was owned by 8 hedge funds at the end of the third quarter of the year.

In addition to Jumia Technologies AG (NYSE:JMIA), Kosmos Energy Ltd. (NYSE:KOS), Sibanye Stillwater Limited (NYSE:SBSW) and IHS Holding Limited (NYSE:IHS) are also some of the popular African stocks that attract investors. ‘ attention.

Click to continue reading and see the 5 Best African Stocks to Buy Now.

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Disclose. None. 10 Best African Stocks to Buy Now is originally published on Insider Monkey.

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