Buy: Afrimat
After a torrid year, during which factors beyond management’s control caused earnings to plummet and the share price to slump 36%, the recent pre-close financial 2026 update initially shocked. But upon management feedback, stability returned. In the past year, market concerns over cement losses from Lafarge South Africa and domestic industrial challenges in the ferrochrome and steel market, where Afrimat supplies minerals, weighed heavily on investor sentiment. Afrimat is not out of the woods yet, but improvement in interim earnings and better touchpoints in cement and anthracite will help. Iron ore, which is important to the company, faces mixed prospects due to the strong rand and jitters over the ArcelorMittal South Africa contract. But overall the commodities portfolio is improving. Earnings are picking up, with asset sales reducing debt into 2026. Given the price slide, the upside scenario looks like an appealing recovery play for patient investors.
Sell: Montauk
When a stock’s fortune is tied to a tweet from a president, rationality as an investment proposition goes out of the window. Alternative energy producer Montauk Renewables, which produces gas from waste products and generates electricity from the byproduct, has been slammed hard under the Trump administration. Montauk relies on government support and green energy credits, and has been mauled as US policy favours fossil fuels. It has also invested heavily in expansion, which has weighed on returns, with investors questioning management’s strategy. The stock may appear cheap, down 69% in the past year, but there is no sign of stability or sentiment recovery. Renewable energy will be the future and Trump’s policies will eventually revert. But Montauk remains a stock to avoid until political change occurs.
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