PDSNET Market Snapshot

Stefanutti is a highly diversified construction company operating in Southern Africa. Its operations include roads and earthworks, marine construction, concrete structures, bulk pipelines, piling, geotechnical services, open pit contract mining, affordable housing, mine residue disposal, renewable energy and other services.

It’s status as a level one BBBEE operator enables it to successfully tender for numerous government and state-owned enterprise (SOE) contracts inside South Africa. The company has benefited directly from the advent of the government of national unity (GNU) and the increase in infrastructure spend.

Historically, like the entire construction industry in South Africa, Stefanutti initially suffered from the suppression of the industry by the ANC and the adjustment to BEE requirements. Its share price fell from a peak of 2700c on the 14th of November 2007 to a low of 8c on the 13th of December 2019.

From that low point began a slow, but steady, recovery. We became interested in the share in June 2024 when its potential became more obvious. It had been in an extended sideways and downward market for 18 months before breaking up at the end of June 2024. Seeing its potential, we added it to the Winning Shares List (WSL) on the 22nd of June 2024 at a price of 146c. Consider the chart: 

The chart shows the end of the share’s sideways pattern in May and June of 2024 and then the sharp upward trend that followed. This upward trend came to an abrupt halt in September 2024 – but by then the share had already risen to a cycle high of 494c on the 30th of September 2024.

What followed was an 8-month downward channel in which the share price fell back to a cycle low of 300c on the 17th of April 2025. During this period, we maintained our view that the share had considerable upside potential and so kept it on the WSL.

Now a new upward trend has emerged, and the share has appreciated strongly to its close last Friday at a new record high of 654c.

In many senses, Stefanutti is an investment in the new South Africa and the potential of GNU to bring about significant economic reforms. Its wide diversity and BEE status means that it can benefit from projects in almost any industry, while being a preferred bidder for government contracts. This has enabled it to increase its order book and become more profitable.

In its financials for the six months to the 31st of August 2025 the company reported revenue unchanged, but headline earnings per share (HEPS) up 161%.

Since we added it to the WSL the share has appreciated by 338,36% - which amounts to over 180% per annum. Very few companies have achieved this level of growth. We expect the share to continue performing well going forward, especially given that the November 2026 elections are likely to result in further economic reform and a focus on infrastructure development.  

Wall Street’s relationship with Trump is evolving. At the start of his current term, when he was playing with the US tariff system, everything he said moved the markets. Today, tariffs have completely lost their force in the market and Trump has moved on to being a warmonger instead.

His attack on Venezuela did not move the markets, but it boosted his confidence and made him easy prey for Israel’s Netanyahu, allowing him to embroil the US in a war which does absolutely nothing for America and has certainly damaged Trump’s mid-term election prospects beyond repair.

The US/Iran war has reached a stalemate with both sides closing the Strait of Hormuz and both sides seizing commercial ships in the vicinity. What is interesting is that while the price of North Sea Brent oil has now climbed back above $105 per barrel, the S&P500 index has made yet another new all-time record high.

Investors are clearly looking beyond the oil price to the excellent results and predictions coming out of S&P500 companies, and especially the “magnificent seven”. Consider the chart:

The chart shows the previous 5% correction in November last year and then Trump’s Iran war correction which broke to a lower low and created the opportunity for a TACO trade. You will note the important hammer formation on 7th April 2026 which gave a clear early warning that a strong recovery was coming. Note also that the 50-day moving average turned upwards again, away from the 200-day – indicating that a death cross had been averted.

The general investor perception is that the Iran war is a temporary phenomenon which will be resolved one way or another relatively soon. The primary impact of the higher oil price, while negative for the economy, has been to seriously erode Trump’s MAGA support base. It is also having the effect accelerating the movement away from fossil fuels towards renewables.

There is now concrete evidence that somebody in Trump’s camp has been profiting massively from his announcements on the war in Iran. There are three clear instances of insider trading in the oil futures market coming immediately prior to his announcements:

1. On 23rd March 2026, a $500m short placed 15 minutes before Trump announced a delay in Iranian strikes.
2. On 7th April 2026, a $950m short placed immediately before Trump announced the US-Iranian ceasefire.
3. On 17th April 2026, a $760m short, placed minutes before the opening of the Strait of Hormuz was declared by Trump.

The Commodity Futures Trading Commission (CFTC) is investigating these trades.

MAGA has been blithely unconcerned about the fact that Trump is inter alia a convicted criminal, a rapist, an inveterate liar or that he and his minions have been engaged in blatant insider trading. MAGA is, however, very much concerned about the price of petrol (“gas”) which has remained stubbornly above $4 per gallon since the war began.

At the same time, the stock market is bracing for the biggest wave of initial public offers (IPO) in its history with SpaceX, Open AI and Anthropic all planning to come to the market later this year. They are endeavouring to raise a total of $3 trillion led by SpaceX’s $1,75 trillion offer. Open AI is looking for about $1 trillion and Anthropic wants $380bn. What is interesting about this is that all three companies are currently running at a loss. Space X, particularly, reported a loss of $5bn last year on revenues of $18,6bn.

This almost looks like the start of a top-of-market listings boom. Investors are losing sight of the underlying fundamentals and focusing only on blue sky potential. With its latest all-time record high last Friday, the S&P500 is now trading at an historical price:earnings ratio (P:E) above 30 – which must be compared with the median average for that index of between 15 and 18. In other words the index is discounting a substantial increase in earnings for its component companies.

Can that be justified? We believe that it can. There is little doubt that the productivity benefits of AI have only just begun to impact the profits of S&P500 companies – let alone other emerging new technologies like humanoid robotics. We believe that the bull trend will continue – but your best defence against a market collapse remains your stop-loss strategy.

Now that the TACO trade associated with Trump’s war in Iran is over and markets are again posting new all-time record highs, it is worth noting that the JSE has not yet recovered completely and the JSE Overall Index (J203) is still 5,6% below its record high of 128456 made on 27th February 2026.

As an emerging market, the JSE always tends to be more volatile than first world markets – which means it falls further and goes higher. The JSE fell a total of 14,3% during this correction where the S&P500 fell by only 8,8%. It is also important to understand that the markets of the world (including the JSE) always tend to follow Wall Street – so we should expect the JSE Overall index to break to a new record high fairly soon. Consider the chart:

Our Winning Shares List (WSL) is still dominated by commodity shares like Sasol, Pan African, Southern Palladium and Anglogold, so there are still investment opportunities to be found among the blue-chip industrials and financials.

One such blue chip is PSG Financial Services (KST). KST has been spun out of PSG which has spawned many very successful JSE listings like Capitec, and Curro. KST is a thoroughly South African company that has a long track record of excellent performance.

Its business consists primarily of asset management and insurance. In its results for the year to 28th February 2026 the company reported R540bn of assets under management (AUM), up 20% from the year before. It also reported its gross written premiums up 5% to R8bn. The company’s core income increased by 22% to R8,28bn and its recurring headline earnings per share (HEPS) rose by a whopping 34%. These are excellent results. Consider the chart:

KST has been in a steady upward trend since March 2024. We added it to the Winning Shares List (WSL) on 23rd May 2024 at 1610c and since then it has nearly doubled to 2865c.

Like most blue-chip shares trading on the JSE, KST shares fell as a result of the war in Iran and the sharp rise in the price of oil. That sell-off gave private investors a rare opportunity to buy further in to this excellent company.

As a private investor it is important to understand that KST is a services company and has an insignificant working capital requirement, while much of its income is annuity income. Its staff are also highly educated and paid – which means that they are not unionised. Given its long track record of generating profits, this makes it an almost risk-free investment.

Of course, we are not the only ones who are aware of KST’s great performance. The institutional fund managers have long favoured its shares and as a result the shares trade for a relatively high P:E ratio of 21,22 – which compares with the JSE Overall indexes average P:E of 15,34. Nonetheless, it is a good share to accumulate during periods of weakness.