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Investment manager Allan Gray says now may be a good time to invest in the tourism, leisure and gaming sector, which has been battered by the Covid-19 pandemic, provided one is prepared to stomach a few years of underperformance in exchange for picking up quality stocks at bargain prices.

Varshan Maharaj, who co-manages Allan Gray’s frontier fund and analyses various sectors for its SA balanced, equity and stable funds, says stocks such as City Lodge, Tsogo Sun Gaming, Tsogo Sun Hotels and Sun International are trading at estimated enterprise values that equate to roughly a third to half of the replacement cost of their underlying assets. He says that makes them a good bet for investors willing to hold on until the economy returns to pre-pandemic levels...

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