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Sibanye Stillwater (SBSW): Among the Worst Middle East and Africa Stocks to Buy Now

We recently compiled a list of the 10 Worst Middle East and Africa Stocks To Buy According to Short Sellers. In this article, we are going to take a look at where Sibanye Stillwater (NYSE:SBSW) stands against the other Middle East and Africa stocks.

Moderate Growth Amidst Challenges

According to the IMF's Middle East and North Africa Economic Update from April 2024, the MENA region is expected to see moderate growth of 2.7% in 2024, up from 1.9% in 2023. Both oil-importing and oil-exporting countries in the region are projected to grow at similar rates, with the gap between the Gulf Cooperation Council (GCC) economies and developing oil importers (excluding Egypt) expected to be around 1%. The region's GDP per capita is forecasted to increase by only 1.3% in 2024, primarily driven by the GCC nations. However, ongoing conflicts continue to weigh on the region’s economic activity, especially in Palestine. Gaza's economy, for instance, saw an 86% decline in Q4 2023 compared to the same period in 2022. Trade disruptions, notably through the Suez Canal, have also affected regional and global commerce.

Over the last decade, many MENA economies have faced rising debt-to-GDP ratios, particularly among oil-importing countries, which struggle to reduce these ratios due to high oil prices. The inability to lower debt through inflation, exacerbated by exchange rate fluctuations and off-budget factors (stock-flow adjustments), underscores the need for greater debt transparency. In contrast, oil-exporting nations tend to see smaller increases in debt-to-GDP ratios during periods of high GDP growth, and in some cases, a decrease.

Meanwhile, private equity (PE) and venture capital (VC) investments have gained momentum in the Middle East and Africa, reflecting a shift in investment trends. Data from Preqin and the Dubai International Financial Centre (DIFC) reveals that about 65% of regional investors plan to maintain or increase their exposure to private equity in 2024, with 56% expressing similar interest in venture capital.

Despite the challenges posed by geopolitical tensions, venture capital continues to play a crucial role in the region's investment landscape. Investors remain optimistic, with many reporting that their PE and VC investments have met or exceeded expectations. Key sectors attracting interest include fintech, technology, healthcare, and infrastructure.

As the region navigates the complexities of economic growth, debt management, and investment trends, it's clear that there are both challenges and opportunities on the horizon. Investors remain optimistic about the region's potential, however, it's essential for policymakers to prioritize debt transparency, economic diversification, and infrastructure development to unlock the full potential of the MENA region's economies. With that in context, let's take a look at the 10 worst Middle East and Africa stocks to buy according to short sellers.

Our Methodology

For this article, we used a Finviz stock screener to find 20 large companies in the Middle East and Africa, by market cap. From that list, we shortlisted companies that have the highest percentage of shares outstanding that were sold short. The list is sorted in ascending order of their short interest. We also mentioned the hedge fund sentiment around each stock.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A mining truck loaded with precious metals in an open pit mine.

Sibanye Stillwater (NYSE:SBSW)

Short Interest as % of Shares Outstanding: 2.39%

Number of Hedge Fund Investors in Q2 2024: 18

Sibanye Stillwater (NYSE:SBSW) is a multinational mining and metals processing company based in South Africa. The company is one of the world’s largest producers of platinum, palladium, rhodium, and gold. Sibanye Stillwater (NYSE:SBSW) also engages in the extraction and refining of iridium, ruthenium, nickel, chrome, copper, and cobalt. Sibanye Stillwater (NYSE:SBSW) is a global leader in recycling platinum group metals (PGM), commonly known as catalytic converters. In recent years, Sibanye Stillwater (NYSE:SBSW) has expanded into the battery metals sector, focusing on mining and processing critical materials and reprocessing mining waste to recover valuable minerals.

For the quarter ending March 31, Sibanye Stillwater (NYSE:SBSW) delivered strong operational performance, particularly in its U.S. Platinum Group Metals segment, where platinum and palladium output surged 22%. The company also saw a 28% reduction in All-In Sustaining Costs (AISC), boosting adjusted EBITDA despite lower PGM prices. Production from its South African operations, including platinum, palladium, rhodium, and ruthenium, increased by 3%, driven by the acquisition of an additional 50% stake in the Kroondal mine, one of South Africa's largest platinum reserves. Additionally, the company’s Sandouville nickel refinery reported a 42% increase in production and a 36% reduction in sustaining costs. Although gold production dipped slightly, the company maintained strong EBITDA thanks to favorable gold prices.

Sibanye Stillwater’s (NYSE:SBSW) Keliber lithium project in Finland is advancing on schedule and within budget which will position the company to benefit from rising demand for lithium and battery materials. In August, the company secured a $560 million green financing package to fund the full development of this project, including the construction of lithium mining, processing, and refining facilities.

While 2.39% of the company's shares are shorted, 18 hedge funds have maintained a bullish sentiment on the stock as of the second quarter with stakes worth $129.07 million. Marshall Wace LLP is the largest shareholder in the company and holds stocks worth $23.12 million as of June 30. Industry analysts maintain a consensus Buy rating, with an average price target of $5.5, representing a 28.09% upside potential from its current levels.

Overall SBSW ranks 6th on our list of the worst Middle East and Africa stocks to buy according to short sellers. While we acknowledge the potential of SBSW as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SBSW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.