BROKERS’ NOTES: Buy Glencore, sell Telkom

Nick Kunze, portfolio manager: Sanlam Private Wealth 

BUY: Glencore

The stock hit a record high last week and it’s up 30% so far this year. But I like its mix of products. As well as coal and cobalt, it has one of the cleanest portfolios of copper, a commodity which I understand is in short supply at London Metal Exchange warehouses. The latest guidance suggests a 44% increase in cobalt production, taking it back to pre-pandemic levels, and electric-vehicle demand is high for this metal. As for the share price gains, momentum traders will say it’s broken out and will be buying it. But I’m not looking at it from a technical point of view. It’s also still trading on a single-digit p:e, and you could argue it’s playing catch-up because it’s lagged the broader mining sector over the years. This is thanks in part to US justice department investigations, so it does carry a health warning. However, it is also going to make money from its trading arm.

SELL: Telkom

There are a number of reasons for not liking Telkom. We don’t own it and never have. As much as its mobile business has grown, its recent earnings missed estimates and it will battle to compete with the big guys. Now that MTN has walked away, I don’t know what’s in the offing. A lot of the premium in the share price was due to takeover talk, and that’s unlikely to come back any time soon.