Daniyar Orazbayev and Yeldar Shakenov, analysts at Freedom Finance Global, have shared their insights on stocks with the most promising growth potential this fall. They have also identified key industries that investors should keep an eye on.
Investment opportunities in the Kazakhstani market
Orazbayev believes that shares of KazMunayGas, a leading national energy company, offer attractive investment opportunities. The company’s strong financial performance in the first six months of 2024, including significant cash flow generation, positions it well for potential dividend increases.
The analyst also advises investors to keep a close watch on Kazatomprom, a prominent nuclear company. The surge in uranium prices has significantly boosted Kazatomprom’s revenue, making the company a strong prospect for increased dividend payouts in the coming year.
Additionally, the expert recommends buying shares of the national telecom operator Kazakhtelecom. Orazbayev highlighted that Kazakhtelecom’s recent sale of its mobile operator, Mobile Telecom Service (operating the Tele2 and Altel brands), has left the company with a significant cash surplus. This financial flexibility could lead to a significant increase in the company’s valuation. With these funds, Kazakhtelecom could either fully repay its debts and pay special increased dividends or partially repay the debt, potentially leading to even larger dividends.
Orazbayev predicts significant growth potential for the telecom operator following the release of its financial statements for the first half of the year. He expects the company’s stock price to rise by 37%. In addition to Kazakhtelecom, Orazbayev foresees strong growth for Air Astana and KazTransOil, estimating a 38% increase in the stock prices of both companies. He also anticipates that Kaspi.kz shares will rebound to their previous levels after the recent attacks by short sellers.
«While Air Astana has strong fundamental growth potential, its shares may not see immediate gains due to the company’s current downward trend. We need to wait for a trend reversal. However, KazTransOil and Kaspi.kz could see growth this fall. KazTransOil has not shown any clear negative trends recently and Kaspi.kz has a good chance of bouncing back after the speculators’ attack,» Orazbayev said.
Promising sectors for investment
Shakenov of Freedom Finance Global recommends that investors focus on the following sectors in the U.S. market:
- Technology and communications: Companies in this sector remain leaders due to their strong business models, innovation and vast customer bases. The analyst expects revenue growth to continue, driven by cloud services and advertising platform expansion.
- Semiconductors and software: Demand for these products is rising as high-tech industries expand. Shakenov notes that standalone technologies, artificial intelligence (AI) and other innovations are driving the need for new solutions in chips and software.
- Biotechnology and renewable energy: Innovations in medicine and the shift toward clean energy create long-term growth potential. The analyst recommends investing in companies within these sectors, as biotechnology continues to advance with new discoveries in genetics and pharmacology. In renewable energy, the accelerating transition is driving increased demand for solar and wind energy, as well as power storage solutions, supporting robust growth for companies in this field.
- Production industries: The global economic recovery and infrastructure investments are boosting demand for industrial goods and services. Additionally, increased demand for agricultural and construction equipment is driving revenue growth and expansion.
- Retail and restaurants: Companies in these industries are positioned for growth amid recovering consumer demand. Increased purchasing power and rising consumer activity provide long-term potential for firms in these sectors.
- Energy: As oil and gas prices stabilize, energy companies are seeing steady growth. Shakenov noted that energy demand remains high and the outlook for production and refining growth continues to support stock prices.
- Financial services: This sector is set to benefit from increased economic activity and rising transaction volumes. As consumer spending rebounds and lending increases, these companies are likely to see a boost in revenue. The expert also anticipates continued growth in electronic payments and digital financial solutions.
- Real estate: This sector, especially digital infrastructure, remains robust due to technology advancements. High demand for data centers and the expanding digital economy are driving revenue growth.
- Healthcare: This sector is resilient, even in the face of market volatility. The demand for medical services and innovative pharmaceuticals remains stable, regardless of economic conditions.
- Utilities: The utility sector is a worthwhile investment, offering stable dividends and returns in uncertain environments. Shakenov stresses that companies in this field play a crucial role in maintaining infrastructure and providing essential resources like electricity and water. Their regulated business models and consistent demand contribute to their strong financial health.
- Software: Companies providing software solutions are well-positioned to benefit from the ongoing demand for digitalization. The sustainability of their business models, combined with diversified client portfolios, ensures stable revenue streams.
- Soft drinks: The steady demand for products in this sector, along with global expansion, bolsters earnings. Beverage consumption remains consistent regardless of economic cycles.
Thematic investments and small-cap stocks
Shakenov also recommends focusing on thematic investments, which allow investors to diversify their portfolios with high-growth-potential stocks. Among these are AI-based products and solutions, which are becoming increasingly sought after, creating significant growth opportunities for companies in this sector. AI technologies continue to find applications in business, enhancing efficiency and unlocking new revenue sources.
The expert advises taking a closer look at small-cap stocks, as they offer substantial growth potential. After a period of underperformance, small companies are poised to recover, especially as macroeconomic conditions improve and interest rates are expected to decline. The anticipated rotation of capital from large companies to smaller ones presents opportunities for rapid growth, making small-cap stocks attractive for investors pursuing an active, fundamental approach.
Shakenov suggests monitoring companies expected to go public before the end of 2024. These include Turo, a short-term car rental company; Ceribell, a medical device manufacturer; PHI Group, a construction firm; and Hornbeck Offshore Services, an oil and gas company.
