The top performers are ranked by their five-year internal rate of return (IRR) on the share price. This method - defined in ur definitions section - can lead to some anomalies, especially if the shares are tightly held, or where the nature of the company has changed. In such instances, good assets are often injected into cash shells and the share price performance improves significantly.
Don't go looking in this table for outstanding share price performance from trusted blue-chip companies (though you may find it). By their nature, they are unlikely to exhibit outstanding performance in a particular five-year period; rather, they tend to show solid, steady growth.
2003 was a good year for equities, with the JSE all share index (Alsi) rising by almost 40% from its trough during the year and reversing a one-year downtrend. It was an especially good performance considering the strength of the rand. The "crutch" of rand weakness that made the market look strong in recent years was absent.
In the five years between end-March 1999 and end-March 2004, the Alsi rose by 82%. That's a compound annual growth rate of 12,7%/year. Johnnic, which is ranked 137th in the Top Performers table, had a five-year IRR of 12,7%, which is in line with the average for the Alsi. And it's to be expected that a blue chip like Johnnic should perform so closely in line with the average for the market.
Mvelaphanda Resources (Mvela) and mining company Messina were respectively numbers two and one last year. Mvela is now number one and Messina has slipped to ninth spot.
The most notable performance in the top 10 is that of clothing manufacturer and exporter Pals, coming from the high 20s last year to number-two spot this year and increasing its five-year IRR by almost 50%.
Iscor's IRR also increased by around 50%, moving it firmly into fourth spot.
Building material retailer Cashbuild, the sixth-best performer, is a great operation and its earnings have risen strongly on enhanced demand for new and improved housing, especially at the lower end of the market. Its IRR more than doubled last year to 63%. But Cashbuild is also a poor trader, with only 617 000 shares trading on average every month, or about 2,7% of issued equity.
Impala Platinum, the premier platinum producer in SA, was in 14th spot, and its IRR performance was below last year's. All platinum stocks performed well in recent years, supported by the combination of a high dollar platinum price and a weak rand. But the much stronger rand of the past 18 months has changed the dynamics for the platinum producers. Impala is no exception.
Tenth-placed Wesco, an investment holding company in the motor industry, more than doubled its IRR. Its underlying earnings performance was good but the main reason for this outstanding share price performance is the fact that it is so tightly held. On average, only 36 000 Wesco shares traded every month, or 0,4% of the issued equity. Little wonder that the share price moves so violently when the earnings outlook is good.
Chemicals company AECI makes 11th spot, with its IRR more than tripling to 56%.
Going further down the rankings, Steers (now renamed Famous Brands) makes a surprise appearance at number 42, having quadrupled its five-year IRR from a year ago.
A favourite of private clients, plastic packaging company Bowler Metcalf, comes in at number 43, its IRR almost tripling to 38%. Hot on its heels at number 49 is Sun International, turning around from -1,6% last year to 36,6% this year.
Retailer Edcon comes in at number 55, with a 35% IRR, a big turnaround from last year's -7,7%. The share price more than doubled during 2003, fuelled by outstanding earnings growth. The recent announcement of a further 103% growth in earnings for the financial year ended March 31 2004 augurs well. The share price is still significantly below its record high of R170, achieved in 1996.
Hotel group City Lodge has shot up the rankings from 120 to 63, as its underlying earnings growth has translated into strong share price performance. It is well positioned to sustain its strong earnings growth.
Astrapak is a great little packaging company, whose IRR of 24,8% has propelled it to number 91.
The top 100 companies all have five-year IRRs in excess of 22,7%. Media company Johnnic Communications (Johncom) just makes it into the top 100, with its IRR doubling from 10,7% last year to 22,8% this year.
The top two furniture retailers in the country, Ellerine and David Sussman's JD Group, turned around this year, both reversing negative IRRs.
And blue-chip food manufacturer Tiger Brands improved its IRR substantially, from -0,7% to 11,3%, while having to contend with deflation in its staple products, largely as a result of the strong rand. Tiger's interim earnings were released recently, suggesting future earnings and share price appreciation could be significantly better.
Alexander Forbes, a financial services company which was until fairly recently one of the darlings of the JSE, has had a dismal time of it in the past year. Earnings have fallen and its five-year IRR is only just in positive territory.
Brewer SABMiller comes in at number 157, turning around last year's IRR of -15,9% to a positive 9,2%.
The once-mighty banking group Nedcor doesn't make it into the top 200 list, with a five-year IRR of -10,7%.
Metro Cash & Carry, another former favourite of the JSE, is still under water at -13,9%. The recent announcement that its local operations will be bought out by management may help to improve the outlook, but in the longer term a possible sale of its Australian assets may bring a delisting from the JSE.
Quite a few large-cap shares don't have a five-year track record, as they were listed only in the past few years. That's why they don't appear in the top 200 companies. Examples are Old Mutual, Telkom, Massmart and Kumba.
The Top Performers table may look quite different next year. If the rand stays relatively strong and commodity weakness is sustained, then many of the platinum and platinum-related stocks in the top 10 may fall back badly. Some of the more solid, locally orientated industrials may start clawing their way up the rankings.
On the other hand, many companies that were expecting a weaker rand - and moaned incessantly when the currency strengthened - now seem to be resigned to planning for a rand at about R7-R8/US$. If it does then weaken further, this will be regarded as a bonus. It is now rare to find a chief executive who assumes the rand will get significantly weaker in the foreseeable future, which means that affected companies are becoming leaner and meaner to cope and to hold out the prospect of growth. That isn't always good for jobs - but it's also more prudent.