Why are cheap shares so popular?
The phrase “undervalued” can also be used to indicate inexpensive or low-cost equities.
One of the reasons that “cheap” shares are popular relate to an undervalued firm may have solid fundamentals, but the market has not yet caught on, and the present stock price does not reflect the company’s real, greater worth.
6 Cheapest Shares on the JSE
4Sight Holdings Limited (JSE: 4SI)
A multi-national, diversified investment holding company founded in 2017, 4Sight Holdings Limited uses the broad range of products and services offered by its subsidiaries, including Industry 4.0 technology solutions, and more.
Through its subsidiaries, 4Sight Holdings Limited offers technological solutions to a variety of sectors, especially in South Africa.
It has a focus on robotic process automation, big data, cloud computing, business intelligence, digital twins as well as simulation, information and operational technologies, production scheduling, horizontal and vertical integration, the industrial internet of things, VR, and more.
Companies in the telecommunications, mining, manufacturing, energy, chemicals, private, and public sectors are among the recipients of the firm’s services.
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Nedbank Group Ltd (JSE: NED)
Nedbank Group is one of South Africa’s leading financial services providers, offering a comprehensive range of wholesale and retail banking solutions, as well as insurance, asset management, and wealth management services.
Headquartered in Sandton, Johannesburg, Nedbank operates primarily in South Africa, with a presence in several other African countries and international offices in the UK and UAE.
A major South African bank with a P/E ratio under 7, and a healthy dividend indicates a potentially undervalued status in the financial sector.
Nedbank reported a revenue of ZAR 69.1 billion and a net profit of ZAR 15.7 billion, reflecting an 11% increase from the previous year. The bank maintains a conservative lending approach and robust capital base, positioning it as a stable option.
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JSE Limited (JSE: JSE)
JSE Limited operates the Johannesburg Stock Exchange, Africa’s largest stock exchange, providing a platform for trading a wide range of financial instruments, including equities, bonds, and derivatives. Established in 1887, the JSE plays a crucial role in the South African economy by facilitating capital raising and providing liquidity to investors.
The exchange has continually evolved, adopting advanced trading technologies and regulatory frameworks to enhance market efficiency and transparency. It also offers various services, such as market data dissemination, issuer services, and investor education programs.
The operator of the Johannesburg Stock Exchange itself, with a P/E ratio of 11.80 and revenue of ZAR 2.99 billion, is a solid choice for any cheap shares list.
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Redefine Properties Ltd (JSE: RDF)
Redefine Properties is a South African-based Real Estate Investment Trust (REIT) that owns and manages a diversified portfolio of office, retail, industrial, and specialized properties. The company focuses on delivering sustainable and growing income streams to its investors through active property management and strategic acquisitions.
Redefine’s portfolio includes significant investments in South Africa and select international markets, aiming to provide shareholders with a diversified and balanced property exposure.
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Exxaro Resources (JSE: EXX)
Exxaro Resources is a South African-based diversified resources company with interests in coal, energy, and ferrous markets. It is among the top five coal producers in South Africa and has been actively investing in renewable energy projects, including wind power generation assets.
In 2024, Exxaro reported a decline in profit to approximately ZAR 7 billion, down from nearly ZAR 11 billion the previous year, attributed to lower coal prices and logistical challenges. The company appointed Ben Magara as its new CEO in April 2025, aiming to navigate the company through these challenges and drive its diversification into green energy transition minerals.
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Sanlam Ltd (JSE: SLM)
Sanlam is a diversified financial services group headquartered in South Africa, with operations spanning 31 countries across Africa, Asia, and the United Kingdom. The company offers a wide array of services, including life and general insurance, financial planning, retirement solutions, and wealth management.
In the first half of 2024, Sanlam experienced a 40% surge in half-year profit, with headline earnings per share rising to 473 cents. The company’s total net client cash flow more than doubled to ZAR 23.9 billion, driven by strong performances across its life, health, and general insurance sectors.
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How to choose the Cheap Shares in South Africa
Use a Stock Screener
First, evaluate the available stock screeners. Most traders will find that many internet stockbrokers have them, as do several financial websites.
The screener enables you to sort by every conceivable attribute, and you can easily specify your desired outcomes characteristics, such as yearly sales growth beyond a specified threshold.
In addition, more sophisticated screeners, such as those that require a monthly or annual subscription, will provide additional criteria and customization options.
Set a target for the growth rate on any future earnings
The rate of a company’s expansion is a standard criterion for determining its quality. Investors tend to put a higher value on rapidly developing firms, making them an appealing spot to begin their hunt for excellent companies.
Create a screen for a company’s projected profit growth rate on your chosen screener. A decent starting point, for instance, could be 10% every year for the next five years.
Next, consider raising this to 15% or even 20% to see what is accessible. Earnings growth of more than 20% is astronomical.
If the screener does not have a screen for future profit growth, apply the sales growth screen. Look for firms whose sales are rising at the desired pace. And if the screener does not provide profit estimates for the future, examine the prior five years’ earnings or sales growth instead.
Use the Price/Earnings Ratio of the company to find undervalued shares
To determine the worth of a company, investors often divide the current share price by its yearly profits per share.
This ratio is known as the price-to-earnings ratio, or P/E ratio, and the lower the P/E ratio, the more affordable the firm and its shares.
If you pay less for the profits, you are receiving a better bargain, and you should always add other criteria for the company’s current P/E ratio to the screener to compare it with other parameters.
Emphasize the market cap to filter out any risky companies
The screener should provide you with dozens of inexpensive firms that experts believe will have strong future profit growth based on the metrics that you entered.
Set the minimum size of the firm, as determined by its market capitalization, to avoid smaller, riskier equities if you wind up with more companies than you need. Overall, you must remember that the riskier a corporation is, the lower its market capitalization.
Conclusion
Buy Low, Sell High is a simple motto, yet it is difficult to implement. This investing approach is built on the notion of market timing, which is difficult for even seasoned investors to execute.
You could use moving averages to identify whether to purchase or sell a stock, but you need also to do stock research to evaluate if a company’s earnings are likely to revive.
