Share to watch: Spar has a simple and robust recipe for success

JOHANNESBURG – There is a meme going around that says 2020 is a unique leap year: February has 29 days, March has 300 days, and April 5 years. This is so true!

Every week now feels like a year, considering everything that happens on an hourly basis. A lot has changed, most of us used to be allergic to grocery shopping, and now it is the highlight of the week. Everyone loves it. It makes sense that these shops must be beneficiaries of the coronavirus in some way. Obviously, they are only allowed to sell essential goods, while their clothing, liquor and household goods are gathering dust.

In South Africa, nobody can eat takeaways or restaurant food, and the grocers at least have the prospect of selling more food and have some form of compensation. Many other companies are hulled in uncertainty and have no way of predicting their chances or future opportunities.

The SA Reserve Bank (SARB) is now projecting an economic contraction of more than 6percent for the full year for the country. Uncertainty of when and how exactly we will be coming out of lockdown, and how it will affect the economy and businesses in general, is uncertain.

Against this backdrop, companies’ earnings prospects remain opaque, and finding safe havens is more complicated. Quality stocks with proven resilience and secure high-quality dividend yields are worth considering. Local food retailers might benefit, but it remains to be seen what their foreign operations will bring to the table. The one exception might be Spar, with their offshore businesses in relatively good health.