“If you look at Louis Vuitton and Richemont, they trade at a discount compared to other stocks in the luxury group such as Prada international,” Pieter Fourie, head of global equities at Sanlam Private Investments told CNBC Africa on Wednesday.
Fourie explained that the group’s global strategy is to invest in a concentrated portfolio of companies with strong balance sheets and low debt earnings as they offer more sustainable earnings yields.
For instance, he added, Phillip Morris International, the global tobacco brand, which has exposure to emerging markets such as Indonesia and the Philippines are trading at a discount price compared to British American Tobacco.
Their long term investment model also focuses on companies that are in a secular growth industry, such as MasterCard. Also, the stock
“We find the secular growth opportunity more compelling”, said Fourie.
In terms of African investment, the fund holds shares in stocks such as Colgate, Unilever and Nestle, in an attempt to get exposure to the continent in an indirect manner.
In the long term, these listed companies will continue to be driven by growth in Africa and India however in the short term, their earnings revisions are weak due to their exposure to emerging markets.
“In the short term, if you look at earnings revisions it’s negative because of their emerging markets exposure but as these stocks pull back which we’ve seen in the last week or so, it will create an opportunity again to pick up those stocks for those that believe in buying for the very long term,” Fourie explained.
Another investment opportunity, he added, exists in the Asian market in the form of Samsung Electronics.
“What we have found in Asia is Samsung Electronics. We think there’s great value support for the stock trading close to book value levels. They still have a large opportunity in China where they’ve taken the lead by quite a distance from the likes of Apple and Nokia,” he added.