Stock Pick of the Week with Momentum Securities: 20 May – Impala Platinum

Momentum’s leading stockbroking division – Momentum Securities – will be bringing you their Stock Pick of the Week, each week on a Wednesday or Thursday.

The stock pick motivation is available as written content and a downloadable video and audio clip.

This week’s pick: Impala Platinum
About: South Africa’s Impala Platinum Holdings Limited, or Implats, is one of the world's foremost producers of platinum and associated platinum group metals (PGMs). The Holdings group owns several companies which operate various local mines, but its most significant one is the Impala mine in the North West province of South Africa.

Portfolio Manager for Momentum Securities, Serfaas Badenhorst shares his insight on Impala Platinum.

Click here to download:
• the audio clip
• the video clip.

Our stock pick of the week is Impala Platinum, a precious metals mining company based in South Africa, listed on the Johannesburg Stock Exchange. But for those of you who prefer offshore exposure, it has an ADR listing in the United States of America, too. During the last year, we've seen a big uptake in the price of precious metals and this was basically due to supply constraints, as well as the Rand weakening against the U.S. dollar.

In 2020 there was actually a deficit of platinum in the market. According to analysts, the deficit will turn to a surplus later in 2021 and we've seen a bit of price weakness, too, because of the fact that supply constraints are being alleviated, and also that the Rand is strengthening against the U.S. dollar. Although there was a bit of a price weakness, we see this as a buying opportunity currently, with a lot of growth potential still existing in the sector. The growth mainly comes from the motor industry, getting back to pre-Covid levels, as well as the continual search for clean emissions to which platinum is obviously a big contributor.

Of all the companies putting up their hands to see who's going to recover post Covid, Impala Platinum is one that is greatly poised. They have a strong balance sheet, they are creating decent free cash flows and they are paying a dividend yield of more than 6.5% at this stage.

And for that reason, our stock pick of the week is Impala Platinum.