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When compared to the petrol price, how have the shares in the Top40 kept up?

Posted by: Garth Mackenzie Posted on: 2013-08-12


I recently noticed that the share price of AngloGold had hit a new 10 year low. This got me thinking back to where I was 10 years ago when this stock was last at the same price it is today. 10 years ago, I had recently finished university and had been at my first proper job for nearly a year. I was still driving around in my student car – a Fiat Uno. It cost me around R160 to fill the tank with petrol back then – a lot less than it cost to buy one share in AngloGold at the time. That thought got me wondering how much value AngloGold has destroyed over the past 10 years if you consider how much the price of petrol has risen, and how much the price of AngloGold has fallen. It also got me wondering how much value has been created in stocks like Naspers and Richemont if you measured them in terms of the price of a litre of petrol.

 

This thought intrigued me so much that I decided to do the exercise for myself on the stocks in the JSE Top40 index to see where real growth has and hasn’t occurred.

 

I used the retail price of a litre of 95 Unleaded petrol at the reef as a benchmark. I used this benchmark, because it is a commodity that has not changed at all in ten years, and it is a commodity that affects the cost of living of every citizen in the country either directly or indirectly. In August 2003, a litre of petrol cost R4.02. Today that same litre of petrol costs R13.55. This is more than a three fold increase.

 

So which stocks have kept up, and which stocks haven’t?

 

The stocks I have analysed are stocks that are currently in the Top40 Index that were also listed in August 2003 – 10 years ago. The Top40 basket has changed somewhat over that time. Stocks that have been included since 2003 are British American Tobacco, Intu Properties, Kumba Iron Ore, Mondi, and Vodacom. But these stocks were not listed in 2003 or were not listed in their current form, and hence I have left them out as they were not available to trade in 2003.

 

The exercise was not as simple as it seems at first. This is because a lot of the stocks that are currently in the Top40 have unbundled assets over the past 10 years, and these unbundled assets need to be factored back into the value of the shares today.

 

I have not included dividends for the purposes of this exercise. The values shown are just the value of one share in August 2003 versus the value today if you had held the shares for 10 years.

 

The exercise yielded some very interesting results and some interesting themes are evident.

 

One of these themes is that fact that gold and platinum mining has been an incredible destroyer of value. Another theme is that local companies that have successfully stretched their operations offshore to generate earnings in hard currency have been incredible creators of value.

 

In summary, the five Top40 shares that have created the most value in petrol terms the past ten years are as follows: Richemont (+845%), Naspers (+816%), Aspen (+679%), Shoprite (+670%) and Assore (+506%).

 

The five Top40 shares that have destroyed the most value over the past ten years are AngloGold (-86%), Gold Fields (-79%), Anglo Platinum (-56%), Impala Platinum (-52%) and (interestingly) Nedbank (-34%).

 

A detailed breakdown of each of the stocks and their relative performances is included in the table below.

 

By Garth Mackenzie (Founder and Editor of TradersCorner.co.za)

 




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Reply to this post 1 Masike Wow. Intersting facts that is Garth.That's why I'm a subscriber to your website.  

Reply to this post 2 Alwyn. (hanie) Makes you think. Never to buy any share, however famous it may be, and forget about it. "or lock the certificate in your top drawer" as they used to say in days gone by. Very interesting Garth and also useful. Thank you very much. 

Reply to this post 3 Ed  Timing is everything -resources appear to be the detroyers but if you used cuttoff at say aug 2007 it might be different 

Reply to this post 4 Robin And this excludes the dividends received ,if you reinvested the dividend back into that share it look even better  

Reply to this post 5 Chane That's enough to encourage anyone to start investing in JSE! Excellent piece - where can I see more of your stuff? 

Reply to this post 6 Harpo The retailers have really done well!!! The trick is to find what will do well for the next ten and ride. Shoprite and Woolies have been great.. Mass spending power, low interest rates and the access to credit.. Will telecoms be good for next ten years? 




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