PDSNET Market Snapshot

In their latest financials for the year to 30th November 2025 Hudaco describes itself as “...a South African group specialising in the importation and distribution of a broad range of high-quality, branded automotive, industrial and electronic consumable products, mainly in the southern African region”.

It has long been one of our favourite shares on the JSE and we have written two articles extolling its virtues the first on the 7th February 2021 and the next on the 14th of February 2022. It is essentially an investment in the growth prospects of the South African economy. It is not a dramatic performer, but rather a company that is growing steadily both organically and through careful bolt-on acquisitions.

It is well worth taking the time to read their latest financials for the year to 30th November 2025. The fundamentals revealed in their figures should make any investor in their shares feel happy.

Their turnover for the year increased by 4,4% - which is barely above the inflation rate but still shows growth in real terms. What is impressive, however, is that out of that turnover, they managed to increase their operating profit by 8,9% and their headline earnings per share by 15,7% - and this is after taking a R104m goodwill impairment. Their return on equity (ROE) for the whole group was 17% and would have been 19,5% without the impairment. This shows that they kept costs tightly controlled while improving efficiencies across the board – in other words, that they have excellent management.

During the year the company made two acquisitions – Isotec and Flosolve – both of which have now been integrated into the business. Their results are only included for six and seven months respectively – so we can expect them to have a much greater impact on the current year’s results.

Consider the chart:

The chart shows that following COVID-19, Hudaco reached a low point of 5616c on 25th May 2020. Since then it has been rising steadily. We wrote about it in our article on 7th February 2021 by which time the share has reached 10046c and then again, a year later, on 14th February 2022 when it was at 15762c. Since then, the share has climbed to 20680c and looks poised to go higher.

This business supplies a variety of products to the mining industry and so is benefiting indirectly from the rising prices of platinum group metals (PGM), gold and copper. They are also benefiting from the on-going reduction of interest rates and the falling cost of petrol in South Africa which directly impact on the profits of their customers.  

The current price/earnings ratio (P:E) is only 8.9 which is roughly half of the JSE’s average P:E of 16,8. This shows that its value is not yet fully appreciated by institutional investors.  With an average daily volume traded of more than R3,5m, Hudaco is certainly more than adequate for private investor requirements and can now accommodate small institutional investments comfortably.

We expect this share to continue to grow, especially considering its proven track record of conservative and effective management combined with its policy of making regular bolt-on acquisitions. If you are positive about the prospects of the South African economy in the medium term, then this share is well worth your consideration.

Many private investors shy away from IT shares because they can be difficult to understand.  Their business models are often highly complex making it problematic to accurately assess their fundamental risk. Datatec is an international IT and telecommunications company with operations in more than 50 countries world-wide which makes it even more challenging as an investment. My response to this type of complexity is to look at the results and the people involved.

In its results for the six months to 31st August 2025 the company reported gross invoiced income up 9,4% and headline earnings per share (HEPS) up 109,5%. Clearly, this company is growing its turnover while at the same time hugely improving its operational efficiency.

Because of its international footprint, Datatec offers the investor a rand-hedge. It is also obviously benefiting from the world-wide move towards artificial intelligence (AI). It makes a gross margin of 26.3% and its operating costs are coming down. By bringing down its net debt the company has reduced its finance costs by 27.1%. From an investor’s perspective this makes buying the shares far less risky. Companies with plenty of “headroom” have the cash to avoid problems and take advantage of opportunities.  

Its business is divided into three main divisions - technology distribution through Westcon International, integration and managed services through Logicalis, and consulting and financial services through Datatec Financial Services and Analysys Mason.

Consider the chart:

The chart shows that Datatec had an extended period of sideways movement between April 2023 and October 2024. Then it began to move up strongly. We added it to the Winning Shares List (WSL) 26th October 2024 at a price of 3950c, when it began showing signs of structural improvement and it has since gone up to 7781 – a gain of 97% in 15 months. We believe it will continue to perform well as AI becomes more ubiquitous.

Jens Montanana is the CEO of Datatec and has been in that position since the company listed on the JSE more than thirty years ago. His drive and energy are what taken the company up to a market capitalisation of R12bn. Montanana says that “...the growth of interconnected digital communities and increased IT complexity drove infrastructure demand in networking and cybersecurity”. Now I will be first to admit that I do not understand the implications of that statement – but I know growth and financial stability when I see it.

The rapid rise of artificial intelligence (AI) has forced businesses to implement the technology within their operations if they are to remain competitive. Datatec is riding that wave.

Obviously, this is a company which is dominated by Montanana and that does make it vulnerable to his inevitable retirement at some stage. However, we believe that Datatec has built a very solid international; presence which will continue to provide it with growth opportunities in the future whoever is in charge.

It is not one of the fastest growing shares on the JSE, but it has been a very steady performer since we added it to the WSL.

Technical analysis is the study of investor perceptions as they are reflected in the price and volume patterns of a security. It is also true that shares move in cycles which take them from being overbought to being oversold and back again. This is especially true of the blue chip shares which are heavily traded and patronised by the big institutions (pension funds, unit trusts and insurance companies).  The fund managers who manage the institutional portfolios account for about 90% of all trades on the JSE.

In our opinion, Clicks (CLS) is a high-quality share which should be part of every private investor’s portfolio. The problem is that it is generally very popular with the big institutions who are always buying it, which tends to make it very expensive – most of the time. But there are occasions when it goes out of fashion with the fund managers for some reason and at those moments it can represent excellent value and a great buying opportunity. In our opinion, right now is just such a moment.

A few days ago on 22nd January 2026, Clicks published a trading update for the 20 weeks up to 11th January 2026. In that update it said that group turnover was up 7,4% and that pharmacy sales had gained 9%. They also commented that they had record Black Friday sales and robust customer demand for their Christmas gift range.

Consider the diagram below.

The top chart in the diagram below shows the share price of Clicks over the last ten years. The lower chart shows the 200-day overbought/oversold (OB/OS) of Clicks over the same period.

On the OB/OS I have drawn in a -10% buy line and you can see that over the ten-year period there have been just 5 occasions (the green arrows) on which the OB/OS has fallen below -10%. Then considering the top chart you can see that, on each of those occasions, Clicks represented an excellent buying opportunity (the red circles).

On Friday last week, the Clicks OB/OS ended the week at –10,64%. And you will observe that historically it generally does not spend a great deal of time below that minus 10% buy line. Inevitably, the fund managers become aware that it is heavily over-sold and begin buying it, driving the price up again.

Of course, the fact that Clicks is heavily oversold right now does not guarantee that it will not fall further and you should always maintain a stop-loss strategy. But, if you are buying, it does give you a good indication of your probability of being right. In my estimation, the share has spent about 2% of its time over the last ten years below that -10% buy line. That means that your statistical probability of being wrong in buying it at that level is therefore extremely low.

And you will have one great satisfaction – you are not buying it at +24% - but somebody did! Otherwise, the chart would not have gone there.  It is amazing to consider that, less than 4 months ago on 25th September 2025, there were institutional fund managers buying Clicks at an OB/OS level of over +24% (the red arrow). If you buy now at -10,64%, you are certainly doing a lot better than them!