How to choose shares as a beginner investor or trader
There is no fool-proof way for beginners to choose the right shares. Several factors must be considered, including the outcome that investors are trying to achieve, their risk tolerance, and the time, and capital that they can use to invest.
To choose the most suitable stocks, investors must carry out extensive research and analysis, use several metrics, avoid emotions, and diversify their investment portfolio to minimize the risk of loss.
5 Best Shares for Beginners on the JSE
Omnia Holdings Limited (JSE: ON)
Omnia is a diverse group that works in the fields of agricultural, mining, and chemical applications via R&D, manufacturing, and supplying chemicals and specialized services and solutions.
Omnia differentiates itself by providing its clients with value across the supply and service chain via the use of innovative ideas and intellectual capital.
In terms of market capitalization, Omnia Holdings Ltd is now the 105th most valuable stock on the JSE, with a value of ZAR 11.8 billion (or around 0.059% of the equities market on the Johannesburg Stock Exchange).
After opening the year at 64.01 ZAR a share, Omnia's stock has gained 9.23%, placing it at the 76th spot on the JSE's year-to-date performance rankings.
| Growth, Valuation, Trading | Information |
| Price | 69.92 ZAR |
| Market Capitalization | 11.8 billion ZAR |
| Shares Outstanding | 169 million |
| 52-week range | 49.70 – 87.75 ZAR |
| Earnings Per Share | 6.72 ZAR |
| P/E Ratio | 10.40 |
| Dividend Yield | 4.02% |
| Gross Turnover | 32.5 million ZAR |
| Return on Equity | 13.51% |
| Return on Assets | 9.41% |
Industrials REIT Ltd (JSE: MLI)
Located in both the Specialist Fund Segment of the Main Market of the London Stock Exchange and the Johannesburg Stock Exchange, Industrials REIT is a property investment firm (LSE). The UK, Germany, and Switzerland are home to Industrials REIT's holdings.
Industrials REIT, which specializes in Multi-Let Industrials, offers adaptable space that is appealing to a wide variety of tenants at a reasonable price and has the potential to provide a stable and increasing stream of revenue.
With a market worth of ZAR 9.71 billion (or around 0.049% of the Johannesburg Company Exchange equity market), Industrials REIT Ltd is the 120th most valuable stock on the JSE currently.
| Growth, Valuation, Trading | Information |
| Price | 33.20 ZAR |
| Market Capitalization | 9.72 billion ZAR |
| Shares Outstanding | 292 million |
| 52-week range | 28.50 – 44.89 ZAR |
| Earnings Per Share | 1.43 ZAR |
| P/E Ratio | 21.67 |
| Dividend Yield | 4.46% |
| Gross Turnover | 8.53 million ZAR |
| Return on Equity | 20.59% |
| Return on Assets | 4.58% |
Kumba Iron Ore Ltd (JSE: KIO)
Anglo American plc subsidiary Kumba Iron Ore Ltd. is a market leader in providing high-quality iron ore to the world's steel industry by adding significant value to the material.
In South Africa, Kumba operates the Sishen and Kolomela mines in the Northern Cape Province to extract iron ore. Kumba sells its iron ore to clients in a wide variety of countries, including but not limited to China, Japan, Korea, and other European and Middle Eastern nations.
With a current market value of ZAR 148 billion or around 0.738% of the equities market on the Johannesburg Firm Exchange, Kumba Iron Ore Ltd is the 20th most valuable stock currently.
| Growth, Valuation, Trading | Information |
| Price | 458.25 ZAR |
| Market Capitalization | 148 billion ZAR |
| Shares Outstanding | 322 million |
| 52-week range | 385.49 – 803.38 ZAR |
| Earnings Per Share | 103.65 ZAR |
| P/E Ratio | 4.42 |
| Dividend Yield | 22.5% |
| Gross Turnover | 157 million ZAR |
| Return on Equity | 74.68% |
| Return on Assets | 73.28% |
Karooooo Ltd (JSE: KRO)
Over 1.3 million connected cars use Karooooo Limited's real-time data analytics solutions for smart transportation. Karooooo is a worldwide mobility software-as-a-service (SaaS) platform that optimizes the value of automotive and workflow data.
Karooooo, headquartered in Singapore, is the sole owner of Cartrack, a software as a service (SaaS) platform that helps businesses and organizations optimize their operations by enhancing productivity, cutting costs, boosting security, and tracking the environment, ensuring regulatory compliance, and mitigating risk.
Since January 2021, Cartrack has recorded over a million members in 23 countries across five continents. With a current market value of ZAR 11.5 billion, the 110th most valuable stock on the JSE is Karooooo Ltd.
This represents around 0.057% of the equities market on the Johannesburg Stock Exchange.
| Growth, Valuation, Trading | Information |
| Price | 369.99 ZAR |
| Market Capitalization | 11.17 billion ZAR |
| Shares Outstanding | 31 million |
| 52-week range | 320.01 – 620.00 ZAR |
| Earnings Per Share | 15.21 ZAR |
| P/E Ratio | 24.33 |
| Dividend Yield | 2.59% |
| Gross Turnover | 4.42 million ZAR |
| Return on Equity | 21.92% |
| Return on Assets | 24.52% |
BID Corporation Ltd (JSE: BID)
For those who are interested, Bid Corporation Ltd. (Bidcorp) is a global, multi-brand foodservice provider that operates everywhere save in Antarctica and North America. To put it simply, Bid Corp Ltd is a wholesaler of edible goods.
The business provides cold and frozen food, fresh vegetables, meats, and non-food items to businesses all around the world.
Its current market value of ZAR 106 billion places BID Corporation Ltd as the 32nd most valuable stock on the JSE, or around 0.528% of the equities market on the Johannesburg Stock Exchange.
| Growth, Valuation, Trading | Information |
| Price | 314.83 ZAR |
| Market Capitalization | 107 billion ZAR |
| Shares Outstanding | 335 million |
| 52-week range | 271.18 – 360.98 ZAR |
| Earnings Per Share | 11.55 ZAR |
| P/E Ratio | 27.25 |
| Dividend Yield | 2.22% |
| Gross Turnover | 159 million ZAR |
| Return on Equity | 14.27% |
| Return on Assets | 10.26% |
How to choose the Right Share Broker in South Africa
South African traders could not have picked a more favourable time to enter the investment market than the present. Competition among online brokers is high, which means costs are dropping down and features are being boosted.
Those interested in trading global financial instruments could choose from a wide variety of online forex and CFD brokers. However, there are several factors to consider when choosing a broker and we will go through them here.
Commission Charges
Individual stocks, options, mutual funds, exchange-traded funds, and bonds are the main investment types offered by brokers. Some will also provide exposure to the forex market, futures trading, and cryptocurrency exchanges.
Both the suitability of the broker's offerings to your investment requirements and the fees you must pay is dependent on the investments the broker has available. You should pay close attention to the commissions that are involved with the investments you like.
Overall Reliability
There is a diverse selection of brokers available. Several have been popular for many years, while others have just recently emerged.
That does not imply they cannot be trusted, but if they are managing transactions for clients, they are members of a self-regulatory organization like the Financial Conduct Authority (FCA), the Financial Sector Conduct Authority (FSCA) and other regulators, or subject to additional oversight.
Account Fees
While it could be impossible to eliminate account fees, they may be kept to a minimum. To withdraw funds or investments, or to close your account, most brokers will assess a fee. When switching brokers, your new firm could pay some or all your transfer expenses.
If a broker does not charge them, or if you do not use their optional services, you could avoid paying most additional costs.
Annual costs, inactivity fees, trading platform subscriptions, and additional charges for research or data are all examples of the kind of expenses you should be aware of.
Pricing and Execution on Trades
Cost is less of a factor today, leading to commission-free transactions becoming the norm at most brokerages.
However, you should consider the brokerage's position on the controversial practice of paying for order flow and how much it costs before making a final decision.
This is especially true if you are an active trader who wants their deal completed at the best price possible, even if it means a difference of a few cents.
Additional Tools, Educational Materials, and Features
Look for a brokerage that provides free educational tools like live webinars, detailed how-to instructions, video tutorials, glossaries, and more if you are just starting in the investment world.
You should also look at the broker's commitment to educating its customers about the inherent hazards of more complex trading tactics like options.
Conclusion
While the research involved with choosing the right shares can seem intimidating, there are some key metrics that beginners can check to identify suitable investment options on the JSE.
We have provided some of these shares and their metrics, giving beginners a starting point to building a diversified investment portfolio.
