BROKERS NOTES: Buy ASML, sell Sibanye-Stillwater

Buy: ASML Holding

The bad news is that, for reasons I cannot fathom, September is traditionally a poor month for stock markets. The good news is that the selling madness creates attractive buying opportunities. ASML Holding, the Netherlands-based semiconductor equipment manufacturer, is an indispensable player in the AI boom, making the machinery that allows companies such as Taiwan Semiconductor Manufacturing Co and Nvidia to create the products essential for the growth of this innovative technology. ASML’s share price has come under pressure because of restrictions imposed by the Dutch and US governments preventing the supply of the company’s most advanced machines to China. Since end-August, the share price has dropped about 10% on the Nasdaq. But ASML is confident that the financial impact of these constraints will be manageable, and that after a slower 2024, strong growth will return in 2025 and continue for several years.

Sell: Sibanye-Stillwater

Platinum group metals (PGMs) are at an interesting (some would say difficult) juncture. I have always enjoyed Sibanye-Stillwater CEO Neal Froneman’s forthright views and bold strategies, so his cautious outlook on the price of palladium cannot be ignored. Not only are motor manufacturers switching from palladium to platinum, but overall demand for PGMs is facing difficulties because of the increase in electric vehicle production. The market has taken heed of developments. At the time of writing, Sibanye’s shares were half the 12-month high of about R32 and close to the 12-month low of R15.71. While Sibanye’s share price might not fall much lower from current levels, the upside — for now — remains drastically curtailed.