Revisiting 2 Outperform Microcaps

Axe Cap view

Two Microcaps Making Big Waves - But South Africa Stays on the Sidelines

Zacks highlights impressive microcap gains abroad, yet these don’t directly translate to the JSE or rand markets.

Perma-Pipe and Friedman Industries are off to stellar starts, rallying 250% and 120% respectively as they ride Middle East infrastructure growth and steel manufacturing rebounds. The key takeaway for South African investors is the cautionary tale about chasing overseas microcaps without local parallels. South Africa’s JSE-listed infrastructure or industrial players, like Barloworld or Motus, have more muted but steadier growth paths amid domestic economic challenges. Margin pressure at Perma-Pipe is a reminder that rapid ramp-ups often come with hidden costs. Meanwhile, Friedman’s low valuation multiple suggests some headroom, but steel sector cyclicality could hit profitability hard. On the currency front, the rand’s usual volatility against the dollar means those chasing PPIH or FRD from SA face FX risk—not a trivial consideration given current USD/ZAR hovering around 18.70. For JSE investors, this is less a call to jump on foreign microcaps, more a nudge to value steady, locally exposed blue chips amid global uncertainty. this is just our opinion and not financial advice