WATCH: Stock picks — City Lodge and Ninety One

Independent Analyst Chris Gilmour chose City Lodge as his stock pick of the day and Ricus Reeders from PSG Wealth Sandton chose Ninety One.

Gilmour said: “For the past couple of weeks now I’ve been looking at City Lodge and I think City Lodge has been rather dumped over the past year or so.  People don’t like it, they think well the this consumer-economy is dead and on it’s back and that’s probably right but, you know this thing has slimmed down dramatically, they’re in the process of selling the East African operations and if you look at the actual valuation and the replacement value I mean they’ve owned most of their their their buildings and the market’s not putting any value on management at all. I get a value of well over R8 for this and it’s currently trading around about R4, technically it looks like a wonderful bottoming out so, I have no problems in liking City Lodge.”

Reeders said: “I’ve been waiting for the correct price movement of this one but it’s Ninety One asset management plc, it’s the Investec Wealth Management site. They’ve just broken out to new highs both on the London market and over here. Asset management or the correct type of asset management company I think is coming back into play,  we can just take a look at what’s happening with the Coronation share price and I like Ninety One specifically because they have great retention of clients, about 75% of their earnings is recurring income and they pay out 50% of their net earnings and dividend which is wonderful. What I like even more is their asset selection process which is exactly what I think one should take a look at. They invest in a company in which the earnings prospects have changed for the better so it’s not a value strategy or a momentum strategy, in other words we look at a company and say; how’s the earnings going to change? Because price follows earnings, that’s just the way of the world so it fits in completely with my own strategy.”