Market Wrap - Stock pick — Exxaro
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Steven Schultz from Momentum chose Exxaro as his stock pick of the day
"It is a little bit of a gamble but I do think that the numbers work out quite favourably and in the case Exxaro. They obviously have stable thermal coals demand in place, albeit at lower prices than this time last year and of course has a fairly decent stake of about 21% in Kumba Iron Ore so again, one needs to take a view on the cycle and there certainly does appear to be commodity headwinds. But it does currently trade at forward PE of 4.4. It's got a dividend yield of over 10% and has very little debt on its books, their debt equity is about 20% and so one can't argue that that there's not value and at current levels."
"It is a little bit of a gamble but I do think that the numbers work out quite favourably and in the case Exxaro. They obviously have stable thermal coals demand in place, albeit at lower prices than this time last year and of course has a fairly decent stake of about 21% in Kumba Iron Ore so again, one needs to take a view on the cycle and there certainly does appear to be commodity headwinds. But it does currently trade at forward PE of 4.4. It's got a dividend yield of over 10% and has very little debt on its books, their debt equity is about 20% and so one can't argue that that there's not value and at current levels."
