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10 African Companies To Invest In Now

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·13 min read
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In this article, we will look at 10 African Companies To Invest In Now. If you want to explore similar companies, you can also take a look at 5 African Companies To Invest In Now.

Africa is becoming an attractive market to enter for investors. With a growing young population, Africa is becoming a hub for manufacturing. As of June 2022, Africa's population sits at above 1.40 billion residents, representing 16.72% of the world population, and the median age of the residents is 19.7 years. Not only is Africa the second-largest continent in the world by population, but it was pointed out by the World Economic Forum, that six of the world's largest economies can be found in the exotic country.

An Economic Analysis of Africa

In 2021, it was estimated that 54 economies residing in Africa recorded a GDP of $2.7 trillion, up $296 billion from the GDP in 2020. Africa contributes 2.84% to the global GDP and represents 4.97% of global wealth. According to The World Bank's latest biannual analysis, Africa’s Pulse, a 3.6% growth is expected to be registered by Sub-Saharan African economies in 2022, down from 4% in 2021, due to the outbreak of new COVID-19 variants, inflation, global supply shocks, and climate change challenges. However, as commodity prices skyrocket catalyzed by the Russian invasion of Ukraine, things look bright for the mining industry in Africa, the second-largest mining industry in the world. Not to mention rising interest rates further driving the growth of the region's financial sector.

According to The World Bank's analysis, South Africa is expected to record a negative 2.8% growth in 2022, due to structural challenges. However, Angola and Nigeria are expected to grow by 2.7% and 0.2% in 2022, benefiting from rising oil prices and other surging commodities. Apart from South Africa, Angola, and Nigeria, regional growth is expected to hit 4.1% in 2022, and 4.9% in 2023. The Eastern and Southern African regions recorded a 4.1% growth in 2021, but are expected to drop to 3.1% in 2022, and then stabilize at 3.8% in 2024. Moreover, the Democratic Republic of the Congo and Zambia are expected to gain in the near term, particularly from soaring metal prices, and as the region pulls back from fossil fuels, the regions are expected to record significant growth in the long term. Western and Central African regions are expected to record a 4.2% gain in 2022, and 4.6% in 2023. Cameroon is expected to hit 4.4% in growth terms in 2024. Finally, the economy of Ghana is expected to pace by 5.5% in 2022 and stabilize at around 5% in 2024.

In addition to African mining companies, other attractive mining companies to consider investing in include Rio Tinto Group (NYSE:RIO), BHP Group (NYSE:BHP), and Vale S.A. (NYSE:VALE).

Our Methodology

To determine the 10 African companies to invest in now, we looked for major companies bringing in the most revenue to the continent. We reviewed each company's financials, production records, and products to identify which companies present an attractive entry point for investors looking to take stakes in the emerging high-growth market of Africa. For each company, we mentioned the analyst rating for it.

Now that we have seen the growth potential Africa holds, let's look at the 10 African companies to invest in now.

African Companies To Invest In Now

10. Sasol Limited (NYSE:SSL)

Number of Hedge Fund Holders: 5

Sasol Limited (NYSE:SSL) operates as an integrated chemical and energy company in South Africa. The company operates through six business segments: Mining, Gas, Fuels, Chemicals Africa, Chemicals America, and Chemicals Eurasia segments. With soaring crude oil prices, African oil and gas stocks such as Sasol Limited (NYSE:SSL) present a compelling investment opportunity for investors looking to take stakes in developing markets.

This February, Sasol Limited (NYSE:SSL) reported earnings for the six months that ended December 31, 2021. The company reported earnings per share of ZAR 15.02 and generated revenue of ZAR 119.91 billion, up 30.4% year over year. Moreover, the company also reported that its liquidity headroom was ZAR 91 billion. As of June 5, the stock has a forward PE ratio of 6.78 and has gained 55.15% over the past twelve months.

On March 24, Goldman Sachs analyst Faisal AlAzmeh upgraded Sasol Limited (NYSE:SSL) to Buy from Neutral with a ZAR 433 price target. The analyst expects a high oil price environment to continue, further driving the upside for companies with strong feedstock agreements.

Hedge funds are piling into Sasol Limited (NYSE:SSL). At the end of the first quarter of 2022, Insider Monkey spotted 5 hedge funds that held stakes in Sasol Limited (NYSE:SSL) worth $95.87 million. This is compared to 6 positions in the preceding quarter with stakes of $67.42 million.

As of March 31, Arrowstreet Capital is the leading shareholder in Sasol Limited (NYSE:SSL) owning over 3.64 million shares of the company. This amounts to a stake value of $88.13 million, which covers 0.11% of Arrowstreet Capital’s 13F portfolio.

9. Harmony Gold Mining Co. (NYSE:HMY)

Number of Hedge Fund Holders: 11

Harmony Gold Mining Co. (NYSE:HMY) primarily explores, extracts, and processes gold. The company also explores uranium, silver, copper, and molybdenum deposits. Harmony Gold Mining Co. (NYSE:HMY) operates nine underground mines, an open-pit mine, and several surface operations in South Africa. It is one of Africa’s largest gold mining companies, and with commodity prices skyrocketing, now presents an attractive entry point to take up stakes in Harmony Gold Mining Co. (NYSE:HMY).

On March 7, JPMorgan analyst Dom O'Kane raised his price target on Harmony Gold Mining Co. (NYSE:HMY) to $5 from $4 and reiterated a Neutral rating on the shares. O’Kane is bullish on South African gold producers, noting that they are undervalued investment options as compared to their global counterparts, and sees gold stocks soaring as commodity prices record historic highs.

Another reason why Harmony Gold Mining Co. (NYSE:HMY) is an investment option to consider is that it is undervalued and pays dividends. As of June 5, the stock has a forward PE ratio of 10.00 and a trailing twelve-month yield of 1.28%.

At the close of Q1 2022, 11 hedge funds were long Harmony Gold Mining Co. (NYSE:HMY). The total stakes of these hedge funds were valued at $125.30 million, up from $72.56 million in the previous quarter with 10 positions. The hedge fund sentiment for the stock is positive.

In the first quarter of 2022, Polunin Capital initiated a position in Harmony Gold Mining Co. (NYSE:HMY) and purchased over 9.98 million shares of the company. This amounts to a stake value of $50.20 million which covers 14.05% of the hedge fund’s 13F portfolio. Polunin Capital is the dominating shareholder in Harmony Gold Mining Co. (NYSE:HMY).

Like Rio Tinto Group (NYSE:RIO), BHP Group (NYSE:BHP), and Vale S.A. (NYSE:VALE), Harmony Gold Mining Co. (NYSE:HMY) is rising to prominence in the mining industry and presents a compelling investment option for investors looking to take stakes in the emerging African market.

8. Gold Fields Limited (NYSE:GFI)

Number of Hedge Fund Holders: 14

Gold Fields Limited (NYSE:GFI) is another leading African gold producer with reserves and resources in Chile, South Africa, Ghana, West Africa, Australia, and Peru. In addition to gold, the company also explores copper deposits. Gold Fields Limited (NYSE:GFI) has interests in 9 operating mines with an annual gold-equivalent production of roughly 2.34 million ounces, as well as gold mineral reserves of an estimated 48.6 million ounces and mineral resources of approximately 111.8 million ounces. The company is one of the best African companies to invest in now because of its relatively strong production capacity and interests in mineral reserves. 

As of this April, JPMorgan analyst Dominic O'Kane has a Neutral rating on Gold Fields Limited (NYSE:GFI) and a $15.30 price target.

This May, Gold Fields Limited (NYSE:GFI) reported earnings for the first quarter of 2022. The company reported revenue of $1.88 billion, up 5.6% year over year. Moreover, the company’s group attributable equivalent gold production grew 7% year over year and came in at 0.58 million ounces. The company also reportedly generated free cash flows of $161 million.

Hedge funds are piling into Gold Fields Limited (NYSE:GFI). At the end of the first quarter of 2022, Insider Monkey spotted 14 hedge funds that held stakes in the company worth $370.70 million. This is compared to 13 positions in the fourth quarter of 2021 with stakes of $176.41 million. The hedge fund sentiment for the company is positive.

Jim Simons’ Renaissance Technologies raised its Q4 2021 stakes in Gold Fields Limited (NYSE:GFI) by 5%, bringing them to $113.64 million at the end of the first quarter of 2022, making the fund the dominating stakeholder in the company. The investment covers 0.13% of Renaissance Technologies’ 13F portfolio.

Other mining counterparts of Gold Fields Limited (NYSE:GFI) that hedge funds are bullish on include Rio Tinto Group (NYSE:RIO), BHP Group (NYSE:BHP), and Vale S.A. (NYSE:VALE).

7. AngloGold Ashanti Limited (NYSE:AU)

Number of Hedge Fund Holders: 15

AngloGold Ashanti Limited (NYSE:AU) operates as a gold mining company in Africa, the Americas, and Australia. Its flagship property is a 100% owned Geita project located in north-western Tanzania. In addition to gold, the company also explores silver and sulphuric acid. As of June 5, AngloGold Ashanti Limited (NYSE:AU) has a forward PE ratio of 9.25 and a trailing twelve-month yield of 1.17%, which makes it a value dividend-paying African company to invest in now.

On May 9, AngloGold Ashanti Limited (NYSE:AU) reported its performance for the first quarter of 2022. The company reported increased free cash flows of $268 million, and flat gold production of 0.58 million ounces, with the majority of them coming from its properties at Sunrise Dam, Cerro Vanguardia, Siguiri, and Tropicana.

Analysts are bullish on AngloGold Ashanti Limited (NYSE:AU). On March 10, Deutsche Bank analyst Liam Fitzpatrick raised his price target on AngloGold Ashanti Limited (NYSE:AU) to $28 from $24 and maintained a Buy rating on the shares.

At the close of Q1 2022, 15 hedge funds were long AngloGold Ashanti Limited (NYSE:AU) with stakes of $352.45 million. This is compared to 15 positions in the prior quarter with stakes worth $377.74 million.

As of March 31, Paulson & Co is the top shareholder in AngloGold Ashanti Limited (NYSE:AU), owning over 5.97 million shares of the company. This amounts to a stake value of $141.53 million and covers 4.35% of the fund’s 13F portfolio.

6. Sibanye Stillwater Limited (NYSE:SBSW)

Number of Hedge Fund Holders: 21

Sibanye Stillwater Limited (NYSE:SBSW) operates as a precious metals mining company in South Africa, the United States, Zimbabwe, Canada, and Argentina. The company produces gold, platinum group metals, and by-products, such as iridium, ruthenium, nickel, copper, and chrome. Sibanye Stillwater Limited (NYSE:SBSW) is one of the world's biggest and leading mining companies, which is why we have included it among the best African companies to invest in now. In addition to its reputation in the industry, Sibanye Stillwater Limited (NYSE:SBSW) has also demonstrated robust financial performance, and is being closely watched by expert financial analysts and veteran investors.

On March 3, Sibanye Stillwater Limited (NYSE:SBSW) reported record-high earnings for the fiscal year 2021. The company reported earnings per share of $0.76 and generated full-year revenue of $11.64 billion, up 50.4% year over year. The company also reportedly achieved its annual production guidance through all operating segments in 2021. Sibanye Stillwater Limited (NYSE:SBSW) reported that its South African PGM projects exhibited strong growth and recorded production of 1.83 million ounces, well above the upper bound of its 2021 guidance. Moreover, the company reported gold production of above 0.89 million ounces from its South African gold projects, in line with its 2021 guidance.

This May, Goldman Sachs analyst Nina Dergunova initiated coverage of Sibanye Stillwater Limited (NYSE:SBSW) with a Buy rating and a $19.90 price target and implied a 43% upside to the stock. Dergunova cited the company’s diverse portfolio of projects across multiple countries, commodities, and activities while backing her bullish view on the stock.

Hedge funds are bullish on Sibanye Stillwater Limited (NYSE:SBSW). At the close of the first quarter of 2022, 21 hedge funds held stakes in Sibanye Stillwater Limited (NYSE:SBSW)  worth $292.61 million. This is compared to 10 positions in the previous quarter with stakes of $166.03 million. The hedge fund sentiment for Sibanye Stillwater Limited (NYSE:SBSW) is positive.

In the first quarter of 2022, Condire Investors upped its Q4 2021 stakes in Sibanye Stillwater Limited (NYSE:SBSW) by 14%, bringing its Q1 2022 stakes to $89.03 million. As of March 31, the fund owns over 5.48 million shares of the company which makes it the leading shareholder in Sibanye Stillwater Limited (NYSE:SBSW). The investment covers 19.2% of Condire Investors’ 13F portfolio.

Here is what Desert Lion Capital had to say about Sibanye Stillwater Limited (NYSE:SBSW) in its third-quarter 2021 investor letter:

“Sibanye Stillwater is one of the largest PGM (platinum group metal) producers in the world with major operations in South Africa and the U.S. They also have gold mining operations in SA. There is significant upside optionality in their growing lithium, nickel, and uranium activities, which are not yet contributing to earnings and not recognized by the market in SSW’s price.

During the third quarter, the company reported record earnings for the interim period ended June 2021. TTM EPS was R12.03, placing the stock on a PE multiple of 4. Cash generation was excellent, and the company is effectively debt free with surplus net cash. The management team continues to stay disciplined in their capital allocation, using cash profits to settle debt, repurchase 5% of the company’s shares at a discount, pay a healthy dividend (~11% annualized dividend yield), and expand their battery metals strategy with lithium and nickel acquisitions… (Click here to see the full text)

..Sibanye Stillwater is a well-managed, profitable business with excellent capital allocation discipline. I view it as a dividend-paying call option on the normalization of auto manufacturing, climate change initiatives, and inflation. The company’s lithium, nickel, and uranium activities also position them to participate in the continued drive towards “cleaner” energy, and so far, these options are not priced in at all.”

 

Click to continue reading and see 5 African Companies To Invest In Now.

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Disclose. None. 10 African Companies To Invest In Now is originally published on Insider Monkey.