POWR Income Stock of the Week: Sasol Ltd (SSL)

In the current climate where geopolitics, interest rate fears, and a general sense of unease continue to roil markets, it often pays to diversify not only across industries, but geographically as well. Sasol (SSL) is a South African based chemicals and energy company that trades as an ADR (American Depository Receipt) on the NYSE, and is likely overlooked by a large number of U.S. energy investors. 

And, though Sasol is South African based, it has global operations, with U.S. facilities in Texas, Louisiana, and Arizona. The company operates in the gas and oil, and chemicals market, but like many energy companies is moving toward more sustainable energy. 

SSL runs a biannual “Solar Challenge” in South Africa where teams compete in an off road race with solar powered vehicles. The company has several solar farms and green hydrogen facilities in progress which should come online, or become fully operational, in the next few years. 

While Sasol has been navigating the current rocky economic environment, it’s benefiting from higher global oil prices, has been improving operations, and may be in the bottom of the cycle for chemical sales. (3M (MMM) just reported earnings as I’m writing this, and has jumped 5% on a less than feared earnings drop.)

SSL trades at just 4.1x forward earnings and 0.5x sales, while paying a dividend of almost 7%. It has a PE ratio under 15, and operating margins are over 20%. 

Sasol ranks an overall B in our POWR Ratings, and scores higher than 88.79% of the companies in our database. It’s especially strong on the Momentum and Sentiment components, where it scores over 98% and 95% respectively. 

I think the fact that Sasol is not U.S. based gives it a lower valuation that it would have if it were U.S. based and part of the growing consolidation in the oil market. But oil is a global commodity, and the enhanced dividend yield from a non-U.S. based producer is a great way to diversify. 

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SSL shares . Year-to-date, SSL has declined -11.73%, versus a 12.00% rise in the benchmark S&P 500 index during the same period.

Jay is a former professional market maker who cut his teeth trading on the floor of the CBOE. With more than 20 years of experience trading and investing, his focus is on making professional strategies accessible to everyone, which is exactly what does in his highly profitable POWR Income and POWR Stocks Under $10 investment advisory services.

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