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Peter Armitage, CEO at Anchor Capital

BUY: Absa Group

SA banks are still trading at very cheap valuation levels. They have shown strong growth and a steady recovery after the pandemic, both better than expected. The traditional four commercial banks entered the pandemic at very low p:e multiples and continue to trade there. Absa, for instance, is trading at a forward p:e of about 6. It is unusual to buy a growing company, not to say a bank, at these low multiples.

SELL: Coca-Cola (US)

There is a basket of companies, mainly consumer staples, whose share prices haven’t adjusted to the current market reality. This reality includes a steep sell-off in the US equity market. Coca-Cola, for example, is trading at its highest price in about a decade. There is nothing wrong with the company’s management, but Coca-Cola shares, together with some peers in this space, behave like there has been no market crash. At a p:e of 26, the stock is quite expensive.


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