The JSE industrial sector is looking anything but attractive for investors right now. This is probably inevitable, given that it reflects an economy struggling to keep its head above water. But the valuation metrics have worsened in recent months. For example, the p:e of the JSE’s all share industrial index, a useful tool for evaluating the relative attractiveness of stock prices compared to current earnings, has slipped from 31.6 in December to 16.7 now. "Finding value in the current economic environment is tough and the recent results releases have proved that," says Cartesian Capital MD Anthea Gardner.

She says investors must be wary of companies exposed to the local consumer, "such as clothing retailers and insurance, where consumers make the deepest spending cuts". But while industrials have taken a beating this year (down 13.5%, roughly double the loss of the JSE all share index), over five years the performance hasn’t been too bad. Over that period, industrials are up 2...

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