Best Undervalued Shares on JSE

Overview

JSE Limited is the largest stock exchange in Africa and operates from South Africa. It provides the ideal marketplace where shares of more than 66,500 different shares can be traded, giving investors the necessary flexibility they need to build a comprehensive, flexible investment profile.

Undervalued Stocks

The term “undervalued” refers to security and any other type of investment that sells in the market for a price that is below the true intrinsic value of the investment.

A company’s intrinsic value consists of the present value of the free cash flows which are anticipated to be made by the company. The undervalued stock can be evaluated by considering the financial statements of the underlying company.

Its fundamentals can also be analyzed, including cash flow, return on assets, the profit that it generates, and capital management, providing the grounds to estimate the intrinsic value of the stock.

The process involved with buying stocks when they are undervalued is one of the key components of the investment strategy of Warren Buffet, called Value Investing.

It is important to note that value investing is not a fool-proof strategy and there is no guarantee that an undervalued stock will appreciate. There is also no accurate way to determine the intrinsic value of a stock as it is merely an educated guessing game.

When someone refers to a stock as undervalued, they are giving their opinion and belief that a specific stock is worth more than the current market price. It is subjective and may or may not be according to a rational argument that involves business fundamentals.

Many undervalued stocks are assumed to be priced too low according to current indicators, including those which are used in a valuation model. If a specific company’s stock is valued below an industry average, it is considered undervalued.

Using the Value Investing Strategy to buy Undervalued Assets

When using this strategy, investors seek undervalued stocks or securities in the JSE intending to purchase or invest in them. Because these assets can be purchased at a low price, the investor subsequently hopes that they can make a return when these stocks appreciate.

10 Best Undervalued Shares in the JSE

Shoprite Holdings Limited (JSE: SHP)

Shoprite Holdings Limited (Shoprite) is the largest food retailer in Africa and South Africa. There are more than 2,800 different stores spread across 14 different African countries.

Shoprite has more than 140,000 employees which makes the retailer one of the largest employers on the African continent, with consistent developments to create more employment opportunities and many initiatives to help communities.

Shoprite is well-known for its affordable consumer goods and the retailer owns several brands including MediRite pharmacies and LiquorShops.

At the time of writing, Shoprite shares are up 20.59% since this time last year and the increase can be attributed to increased consumer demand. These demands were created due to the easing of the national lockdown because of the Covid-19 pandemic.

FirstRand Limited (JSE: FSR)

FirstRand Limited (FirstRand) is a popular and reputable banking business in South Africa and the largest investment corporation in Africa. Founded in 1970, FirstRand currently has a market capitalization of more than R341 billion, an Earnings Per Share (EPS) of R2.53, and a P/E ratio of 23.42, at the time of writing.

FirstRand is one of the attractive undervalued stocks on the JSE that promises long-term dividend shares. There is also a reliable payment history of over ten years, which is another factor that draws investors to this South African share.

Netcare Limited (JSE: NTC)

Netcare Limited (Netcare) is a popular healthcare group that has a vast network of hospitals in South Africa and the United Kingdom. There is also a wide range of primary clinics, retail pharmacies, and several other components contained in its vast network portfolio.

There are many private hospitals and healthcare groups in South Africa that are trading at the cheapest levels in years, with single-digit forward P/E ratios.

Many hospital groups experienced significant blows because of the Covid-19 pandemic, dropping their shares to some of the lowest figures they have been in years.

However, with the eased lifting of lockdowns and the effort to vaccinate the population, these groups are seeing a slow recovery in performance, and another factor that makes Netcare a worthy investment is that the group pays dividends.

Renergen Limited (JSE: REN)

Renergen Limited (Renergen) is an emerging gas and helium producer which is the only company that currently holds the right to onshore petroleum production in South Africa.

Renergen’s shares have already experienced significant increases following recent announcements. These surround the transportation of Covid-19 vaccines to hard-to-reach areas of South Africa while keeping the vaccines at the optimal temperatures for up to 30-days using special cryogenic cases containing helium.

This innovation was developed especially for Africa as well as Southeast Asian countries where there are many challenges with logistics and supply, especially in reaching certain destinations where there are no national or regional roads.

Apart from the latest medical use for helium, Renergen has magnetic resonance imaging which accounts for 20% of global supplies of gas.

One of the richest helium concentrations on earth is believed to be underground at the Renergen Virginia Gas Project located in the Free State, with the necessary agreements with African Oxygen and the Linde Group already in place to extract the gas.

These are but a few projects in which Renergen is taking the lead, with more planned in the future, which could potentially send its shares soaring.

Metrofile Holdings Limited (JSE: MFL)

Metrofile Holdings Limited (Metrofile) shows stable share pricing over the past year, which could be interpreted as a positive, especially when considering the economic turmoil that the Covid-19 pandemic and subsequent lockdowns have caused.

Metrofile operates in several countries across Africa and the Middle East and what the share price does not show, is the potential bidding war regarding records storage as well as information management specialists.

After restructuring its debt more than two years ago, Metrofile shows solid financial performance with predictable earnings, with income received for the physical storage of documents that it offers.

There is a lot of potential in its line of business, and with healthy levels of cash generation, Metrofile is set to continue reducing debt and its interest bill, making it a feasible investment option for investors who want to achieve portfolio diversification.

Woolworths Holdings Limited (JSE: WHL)

Woolworths Holdings Limited (Woolworths) can attribute a lot of its recent success to its CEO, Roy Bagattini, who was appointed in February 2025, after his predecessor made an ill-fated deal when Woolworths bought the Australian-based department store chain, David Jones.

Bagattini freed up a significant number of shares by selling several properties in Australia, using the proceeds to pay off the in-country debt of more than R4 billion. In addition to this, Bagattini cut costs and there is a turnaround in fortunes expected within the next 12 – 18 months from David Jones.

Under new, strong leadership, Woolworths shares have shown steady increases alongside strong financial performance in the first half of the year.

Impala Platinum Holdings Limited (JSE: IMP)

The platinum sector in South Africa has experienced a drastic turnaround in the past few years. A few years ago, the sector experienced two-thirds of mining shafts that were running at a loss, there were surging costs, falling prices, and frequent bouts of violent labor unrest.

The start of the decline was marked by the Marikana Massacre in 2012, further implicated by the five-month strike experienced by three large platinum producers in 2014.

Impala Platinum Holdings Limited (Impala), has experienced stellar earnings seasons recently, ensuring a profitable footing at the start of 2025 that has remained stable in the past few months.

With surging prices of Platinum, Impala has experienced increases in 2025 earnings to more than R16 billion, with dividends being reinstated and a total of R4.2 billion paid to shareholders, making this share a lucrative investment choice for many investors in South Africa.

Sibanye-Stillwater Limited (JSE: SSW)

Sibanye-Stillwater Limited (Sibanye) is a rival to Impala as a platinum producer. However, Sibanye is also involved with the production of gold, which was its main reason for existence when it spun off from the gold producer Gold Fields.

Gold has always been the preferred safe-haven investment for many investors if there are uncertain times and periods of turmoil, giving the gold the spotlight during the pandemic.

Sibanye is considered one of the most undervalued stocks on the JSE that has a significant amount of potential to appreciate in the future.

Italtile Limited (JSE: ITE)

Italtile Limited (Italtile) is a large tile, bathroom ware, and related products manufacturer and retailer in South Africa. Italtile is a conservative bet as an undervalued share in 2025.

Italtile is busy with upgrades on its tile factory near Hammanskraal, north of Pretoria, and plans to open an additional 10 to 15 stores across the country.

Even though Italtile, much like many other South African companies, experienced the bite of the impacts that the Covid-19 pandemic had on the economy, sales bounced back with the phased easing of lockdown.

Italtile has reliable performance which can be seen from its financial statements over the past decade, showing consistent trading profit and increasing compound annual growth rates.

Old Mutual Limited (JSE: OMU)

Old Mutual Limited (Old Mutual) is a reputable and speciality finance provider in South Africa with more than R900 billion in assets, and revenue that exceeds R170 billion. Old Mutual offers a wide range of financial products and services, and it is one of the largest financial service providers (FSP) in Africa.

Despite seeing a decline in total assets between 2018 and 2019, and regardless of the effects that the Covid-19 pandemic had on the South African economy, Old Mutual shares shows increased performance in the past years, making it a viable investment opportunity for many investors.

FAQ

How do I find out which shares are the best for me?

To determine which shares represent a good investment opportunity you must conduct in-depth research and gain fundamental knowledge of the stock market.

What are undervalued shares?

They are shares believed to be priced too low according to current indicators.

Why should I consider undervalued shares?

They are a cheap investment because they sell for less than the intrinsic value, allowing you to purchase a significant number for less. If these shares start appreciating, it provides for the chance to earn a return on investment.

What trading strategy can I use to invest in undervalued shares?

You can use Value Vesting, which means that you buy a share when it is at a low price and you hold it, allowing it to increase in value over time, and potentially selling it for a much higher value when it appreciates.

What is portfolio diversification and why does it matter?

Portfolio diversification means that you hold different types of investments in a portfolio. It helps keep your portfolio balanced and ensures that if one investment decreases in value, others can offset any loss.