[imagesource: Reuters/Siphiwe Sibeko]

Investors were optimistic about 2020, and prior to what eventually transpired, their optimism was valid. The JSE’s performance the previous five years were questionable at best. At the end of December 2019 returns sat a mediocre 6% – hardly beating inflation. As a result, after what some might have deemed as five years in the desert, investors were looking forward to an oasis in 2020. As we all now know, this did not transpire.

After March 2020, stock markets around the world dived hard and things only continued on a speedy downward trajectory with the JSE trading 30% lower than it did in January of that year. However, it’s not all doom and gloom, especially regarding the local equity market. This in part is due to global stimulus making its way to local shares as global investors have begun to invest in emerging-market assets. Plus, the low-interest rate is also playing its part, thus emboldening investment and growth.

As a result, 2021 is expected to bear fruit to a degree. When it comes to selecting what stocks to invest in in 2021, South Africa offers an incredibly decent portfolio of options. Let us now look to some of those and their potential.

Italtile

Trading at a share price of R14.40 in mid-December last year, one of SA’s biggest tile and bathroom emporiums is a middle-of-the-road bet for 2021. It’s also important to remember that the company has been listed for the last 22 years – a fact which in itself speaks volumes. Lockdown was felt and it was reported that profits fell significantly by the end of June 2020. However, matters started changing for the better in November of that year, proving a couple of things, mainly that construction, on the whole, is a stable vocation, and that low-interest rates are resulting in home-owner spend on primary assets such as their houses.

Woolworths

With an incredibly decent share price of R36.85, Woolworths is predicted to do quite a turn-around since the induction of its new CEO, Roy Baggatini, who took over from Ian Moir.  Moir left behind what some would deem as a trail of destruction, having overseen the company’s acquisition of the Australian-based department store chain David Jones. At the time of acquisition in 2014, Woolworths forked out R21.5 billion, a deal which has subsequently come under tremendous scrutiny, especially after Woollies elected to write down the acquisition value by a staggering R13 billion.  Under Baggatini’s watch, Woolworths shareholders have been assured that they won’t be asked to inject additional funds into the David Jones Brand. Instead, the company plans to sell off various properties owned by David Jones in Australia and then to use the proceeds to service its own in-country debt, which currently sits at R4 billion.

Notable mentions

These days investing isn’t relegated to one stock market, nor is it as pretentiously prestigious as it used to be, and this is primarily due to the proliferation of online trading. Trading these days extends to all the markets around the world. Understanding UK and other Forex markets is part and parcel of the lucrative world of online trading – an alternative to the SA market, but one that also includes it. A real advantage to online trading is the amount of capital required to potentially profit. This singular aspect of the investment process is what really sets it aside from traditional market investments. With regards to South Africa, other notable stocks worth investing in for 2021 would be the slew of private hospitals and banks – both sectors are currently trading at their cheapest levels in years.