In this article, we discuss the 5 best African stocks to invest In. If you want to read our detailed analysis of these companies, go directly to the 10 Best African Stocks to Invest In.
5. Sasol Limited (NYSE: SSL)
Sasol Limited (NYSE:SSL) is an integrated energy and chemical company working on expanding and marketing output technology such as liquid fuels ad low-carbon electricity. In the United States, Sasol has an $11 billion ethane cracker and derivatives project in Westlake which provided 5000 construction and 1200 jobs to Americans. The company continues to expand with the growing demand for electricity.
Earlier this year, Sasol Limited (NYSE:SSL) agreed to sell 30% interest in its Republic of Mozambique Pipeline Company (ROMPCO) to an acquisition vehicle beneficially managed by African Infrastructure Investment Managers Propriety Limited. The agreement is set to take effect in the second half of 2021.
The company currently has a market cap of $9.64 billion. Shares of SSL jumped 87% over the last year. It currently has five Buy analyst ratings and two Hold analyst ratings.
4. Sibanye Stillwater Limited (NYSE: SBSW)
Sibanye Stillwater Limited (NYSE:SBSW) is a multinational precious metals mining company working to produce and market mining properties in the United States and South Africa. The company explores gold and copper deposits and ranks 4th on our list of 10 best African stocks to invest in. This May, Sibanye Stillwater Limited (NYSE:SBSW) reported adjusted earnings of $1.38 billion, and production was up 6% year-on-year.
The company estimates 660,000 to 680,000 ounces of platinum group metals (PGM) output from its US facilities in 2021, and 1,750,000 to 1,850,000 ounces from South Africa. Earlier this year, the company announced its agreement to acquire around 30% equity of European lithium company Keliber. The project includes a chemical factory in Kokkola used for the production of battery-grade lithium hydroxide, which is projected to be completed in 2024.
Desert Lion Capital mentioned Sibanye Stillwater Limited (NYSE:SBSW) in its Q1 2021 investor letter. Here is what the fund said:
“Sibanye is a South African gold and platinum group metals (“PGM”) producer with mines in South Africa and the U.S. Established in 2012, it has since become one of South Africa’s largest gold producers and the largest PGM producer in the world. Sibanye also operate a PGM recycling facility and own a majority interest in DRDGOLD, a specialist in the recovery of gold and other precious metals from open pit tailings.
The investment thesis incorporates the following logic:
- If central banks globally are going to continue printing money unabated, precious metals prices should rise.
- The drive for cleaner and greener is accelerating. The market for platinum, palladium and rhodium is structurally attractive.
- The company is generally mischaracterized. Ask around, and one will find that most people still refer to Sibanye as “a South African gold miner” with “lots of debt from that Stillwater acquisition.”
- It is not quick and easy to ramp up PGM supply in response to higher demand and prices. Favorable supply-demand characteristics will likely remain favorable for longer.
- Bad capital allocation decisions, corporate excesses, and resultant tarnished reputations from the previous boom period are still fresh in the minds of most mining executives. Neal Froneman has proven himself a disciplined capital allocator. His approach to capital allocation is straightforward: deploy capital at expected returns that enhances value to shareholders or distribute it via dividends and buybacks.
- The company is debt-free and generating heaps of cash.
- The valuation is cheap. At current metal prices, Sibanye is trading at about 5 times after-tax cash profits.
Sibanye is effectively a call option on a potential commodity super cycle. In the meantime, the value of our “option” is unlikely to deteriorate as we are rewarded with healthy dividend flows.”
3. Standard Bank Group Limited (JSE: SBK.JO)
Standard Bank Group Limited (JSE:SBK) is a financial services company that was founded in 1962 and offers lending, money transactions, savings accounts, savings accounts, insurance, and other advisory services. The company operates in over 30 countries including 17 in Africa and is the largest African bank based on assets. Standard Bank Group Limited (JSE:SBK) ranks 3rd on our list of the 10 best African stocks to invest in. The company continues to acquire innovative solutions to increase its assets. In 2020, the company made a purchase of 35% equity stake of TradeSafe Escrow.
TradeSafe Escrow is an online platform that safeguards buying and selling through online transactions. The acquisition will allow its users to utilize the commodity and M&A transactions that will be offered on the platform. For the full year 2020, the company reported group headline earnings of $1.11 billion, a 43% decreased from the prior year.
2. Naspers Limited (OTC: NPSNY)
Naspers Limited (OTCMKTS:NPSNY) is focused on producing and developing consumer internet platforms that specialize in online retail and venture capital investment. The company invested in various internet-heavy companies such as OLX, Swiggy, Delivery Hero, and eMAG, among others. Naspers Limited (OTCMKTS:NPSNY) serves over 300 million users globally and ranks 2nd on our list of the best African stocks to invest in.
Naspers Limited (OTCMKTS:NPSNY) currently trades for $39.81 and offers a dividend yield of 0.18%. In the year ended March 31, 2021 (FY2021), Naspers Limited (OTCMKTS:NPSNY) reported core headline earnings of $3.5 billion, up 15% year-over-year, while revenue was up 32% year-over-year to $29.6 billion.
1. MTN Group Limited (OTC: MTNOY)
MTN Group Limited (OTCMKTS:MTNOY) is the top African stock to invest in. The company operates in South Africa and Asian countries to develop communication services such as broadband and internet products like voicemails, FaxMail, SMS information service, Virtual Recharge, among others.
The company was founded in 1994 and has gained over 279.6 million subscribers. In the first quarter of 2021, MTN Group Limited (OTCMKTS:MTNOY) revenue came in at $2.93 billion, up 17.8% year-over-year mainly brought about by the improvement in the demand for data and digital financial services during the pandemic. Shares of MTNOY jumped 76% over the last twelve months.
You can also take a peek at 10 Best Technology Stocks That Pay Dividends and 15 Biggest E-Commerce Companies in China.
