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Equity Insights

Best Ideas: Top Stock Picks 2026

Chantal Marx, Sithembile Bopela, Pritu Makan, Zimele Mbanjwa, Khumbulani Kunene & Motheo Tlhagale

FNB's research team's top long-term stock picks for 2026

Global equities delivered a strong performance in 2025, with the Johannesburg Stock Exchange (JSE) outperforming global peers buoyed by a strong commodity cycle, local currency strength and an improved country-risk premium amid ongoing political stability and reform. The All Share Index finished up ~42% by year end. For most of the year and well into 2026, gold and platinum miners have been the undisputed heroes, with gold breaching the $5,000/oz. mark for the first time. Although the SA Inc basket has largely benefitted from sector rotation with the rand strengthening progressively against a weaker dollar, valuations still look attractive in this area of the market.

The S&P 500 posted a bumper ~18% for the year, although AI fatigue coupled with heightened volatility due to Trump 2.0 policy shifts saw the market give up earlier year gains. Initial deregulation and tax-cut optimism buoyed financials and small-caps, but the return of aggressive tariffs post-Liberation Day introduced notable volatility. The "Magnificent 7" quickly evolved from a monolith into a "Divergent Seven" as leaders like Nvidia and Meta continued to surge on AI exposure, while the likes of Tesla and Apple faced headwinds from margin erosion and supply-chain vulnerabilities. While we still see upside potential within the AI and hyperscale thematic, these stocks look expensive, prompting us to look for value elsewhere.

Across the pond, markets in continental Europe outperformed their United States (US) counterparts for much of the first half of the year, although geopolitical and trade uncertainties capped further upside. The Stoxx 600 ended the year up ~17%, buoyed by the Granolas, which are high-quality European large-caps spanning pharma, consumer goods and tech. A surge in regional defence spending and a recovery in luxury goods, particularly as Chinese demand flickered back to life, was also supportive.

Equities in China showed strong improvement last year despite structural constraints (MSCI China Index: +28%). Stimulus measures from late 2024 provided a tailwind that carried into early 2025, although the rally faded somewhat against a backdrop of looming trade wars and concern around economic growth targets.

While momentum will likely support last year's winners, we believe this will be a year to seek out resilient earners. We maintain a long-term view on our selections. Our 2024 stock picks have delivered ~25% on a two-year annualised basis but in 2025, risks were more balanced across our portfolio picks which delivered ~8% on a total return basis in rands (measured from the day of publication, being 24 January). Our best performers were L3 Harris (+65.3%), Coronation (+53.2%), and Prosus (+39.6%). Notable underperformers were TFG Retailers (-40.6%), Birkenstock (-33.9%) and Novo Nordisk (-33.7%).

Local picks

Naspers (NPN)

Naspers is a prominent multinational media group which has, over the last two decades, evolved from a traditional print media business in one country to a broad-based e-media company in multiple markets. Naspers' most notable investment is Prosus, which in turn has a large shareholding (22.8%) in Chinese internet giant Tencent. Prosus is focused on e-Commerce, Food Delivery, and Classifieds.

• Naspers' share price has come down meaningfully from its last peak (R1 306 per share on 3 October 2025). This has been driven by softness in Tencent's share price, rand strength, and a widening of the discount at which it trades relative to its NAV.
• In the financial year ended 30 September 2025, Naspers' core headline earnings per share increased 24.2%. Profitability gained further momentum on the back of strong revenue and earnings growth in Prosus' consolidated e-commerce businesses (with adjusted EBITDA growth accelerating to 70%) and equity-accounted investments, particularly Tencent.
• The result was further supported by ongoing share buybacks, which are expected to continue in the current financial year.
• A notable improvement in cash flows was a key highlight. Tencent contributed meaningfully through a sizable dividend, but even excluding this dividend, the group recorded a significant inflow (versus an outflow in the prior year), reflecting improved profitability across the e-commerce portfolio.
• Naspers and Prosus' new leadership team has shifted gear in actively managing the portfolio. We expect improved profitability in the consolidated businesses, continued M&A activity to drive growth, and further corporate actions aimed at unlocking value in the short to medium term.

Disciplined capital allocation and a strong balance sheet position the group well to execute on its strategy despite turbulent market conditions. We are also positive on Tencent helped by its gaming dominance, strong capital returns, and a possible re-rating in the share price.

The biggest risk facing this company is the continued reliance on Tencent's share price and performance as it relates to the financials and stock performance of the company. There is also execution risk in a new, more aggressive, strategy.

Naspers is trading on a discount to its net asset value of ~45%. Aside from an expected recovery in the Tencent share price over time, we would also anticipate this discount to narrow to ~30% as investors gain clarity on recently announced M&A activity.

Clicks Group (CLS)

Clicks is a leading South African health, beauty and wellness retailer, supported by UPD - the country's largest full range pharmaceutical wholesaler. Its integrated retail distribution model strengthens Clicks' dominant position across pharmacy, beauty and healthcare categories, while enhancing supply-chain resilience and margin management.

• Expansion of the pharmacy network continues to capture growing demand for healthcare and wellness products, driving steady retail volume growth despite wider inflationary pressures.
• The integrated model leverages UPD to ensure high product availability, operational efficiency and margin discipline across the store network, reinforcing Clicks' competitive advantage..
• A balanced revenue mix between retail and wholesale provides defensiveness, while strong purchasing compliance in UPD supports turnover and cushions macroeconomic volatility.
• Well timed promotional activity during peak periods such as Black Friday has delivered meaningful volume gains and deepened customer loyalty, supporting ongoing market share strength.
• Margin risks remain, including heavy discounting from competitors necessitating ongoing efficiency improvements.

For the 20 weeks ended 11 January 2026, group turnover rose 7.4% to R19.5 billion, supported robust retail sales growth (+6.0%) and increased UPD distribution turnover (+11.4%). Retail benefitted from strong Black Friday and festive season trading, but sales were impacted by stock availability constraints linked to a new Cape Town warehouse system. Availability has since improved and is expected to normalise by February 2026. UPD gained from improved purchasing compliance, though total managed turnover fell 0.2% after the non renewal of two bulk contracts. There is a high likelihood that these were low-margin contracts, however, which lessons our concern in this regard.

We continue to view Clicks as a high quality, defensive business with strong brand equity, operational consistency and proven execution. The company trades on a forward PE of 20.1 times, which is attractive relative to long term averages and considering its resilient performance profile.

Pepkor (PPH)

Pepkor is a leading non-grocery retailer in South Africa that offers a wide range of services across several categories including Apparel and Footwear, and Electronics and Appliances. While most of its operations are in South Africa, the company also operates in other African countries and Brazil. Pepkor owns and operates several household names including PEP, Ackermans, Bradlows, Rochester, Incredible Connection, HiFi Corporation and Tekkie Town.

• Amid solid growth momentum in emerging markets, the group is set benefit from an improving trading environment as central banks maintain their dovish stance for the year ahead. This will provide relief to consumers, which may result in increased consumer spending.
• Pepkor has diversified revenue streams across its different businesses and has seen a solid top-line performance in FY25, on the back of robust growth across retail and a step-change in financial services and fintech contributions.
• Pepkor's geographical diversification, and strong presence in South Africa and Brazil, continues to bode well for the group.
• Digital and Fintech are expected to be key levers of additional growth in the medium term.
• The operating model is highly cash generative, which should allow for continued internal investment in growth as well as shareholder distribution growth.

Pepkor delivered a solid performance in FY25, with both top- and bottom-line metrics achieving double-digit growth. Revenue growth was broad-based, but the standout contribution came from FinTech, where financial services, lending and insurance scaled rapidly. Profitability was buoyed by robust revenue generation, which was supportive to the margin expansion amid Fintech margins coming in structurally higher than merchandise margins. Credit and handset rental growth materially lifted debtors' costs, but credit quality indicators remained stable, and the balance sheet stayed conservatively geared supported by strong cash generation.

Growth prospects remain positive as the group focuses on integrating a substantial pipeline of acquisitions. The group is planning 250 to 300 new store openings, continued omnichannel expansion and further monetisation of its store footprint and digital ecosystem.

Pepkor is trading at a forward PE of 13.7 times, which looks fair relative to its own long-term average rating, but a premium to peers- justified by the company's solid fundamentals and superior growth outlook.

Omnia (OMN)

Omnia is a multi-disciplinary operator offering products and services used in the mining, agriculture, and the chemicals sectors. The company has a presence in 26 countries, where it manages 62 distribution centres and 46 blending and packaging facilities. Omnia's wide reach enables it to streamline its supply chain and ensure the efficient delivery of products across key sectors.

• The group's Agriculture segment is driven by its Nutriology® model, integrating soil health, crop performance and sustainable practices. Geographic diversification into growth regions such as Africa, Brazil and China supports long term potential, particularly given low advanced fertiliser use in emerging markets.
• The high margin Mining segment benefits from advanced digital blasting technologies and sustainable solutions, capturing rising demand for critical minerals like copper and cobalt, which are essential to the global energy transition.
• Omnia is restructuring its loss making Chemicals business (completion expected in 2H26) after prolonged weak domestic demand and global price pressures. The process should unlock margin expansion, reduce complexity, and allow sharper focus on core growth areas in Agriculture and Mining.

Omnia's 1H26 results (HEPS +11%, EBITDA margin +40bps y/y to 10.5%) highlighted resilient demand, improved efficiency and cost discipline in its core segments, despite a drag from Chemicals. Cash generation remained solid, working capital efficiency improved, and the balance sheet stayed strong with net cash of R695 million.

Looking ahead, agriculture should benefit from supportive agronomic conditions in South Africa, a recovery in Zambia and expanding global distribution of high-margin biostimulants. Mining remains positioned for further expansion with new detonator plants in Canada and Australia, a growing African footprint, and technology partnerships enabling global scaling.

Shareholder returns are core to Omnia's capital allocation strategy, and the group has a history of increasing dividends, accompanied by special dividends and share buybacks, more recently. The strong cash position and lack of long-term debt support shareholder return continuity.

Bidcorp (BID)

Bidcorp is a market leading global food service distributor with operations spanning the United Kingdom (UK), Europe, the Middle East, South America, Asia Pacific and South Africa. Its business units operate across food and ingredient manufacturing, including catering and hospitality, bakery, meat, seafood, poultry and processing. The group's strategy prioritises organic expansion in existing regions and disciplined acquisitive growth in new ones, supported by customer mix improvements and value add opportunities.

• Bidcorp benefits from a well diversified client base across developed and emerging markets, with businesses at varying stages of maturity and limited exposure to any single client or category.
• Management remains focused on refining the customer portfolio, broadening market reach and investing in capacity to support future growth.
• The dual-growth strategy-organic first, supplemented by bolt on acquisitions-helps spread risk, with a flexible balance sheet enabling further acquisitions across both new geographies and value add product adjacencies.
• Its market leading positions in many territories provide pockets of pricing power in what is typically a low margin industry. Growth is further enhanced by in territory bolt ons that deepen product range or expand geographic coverage, and by selective strategic acquisitions entering new markets.

The group delivered a robust four month FY26 update in November, with revenue, trading profit and HEPS all ahead of expectations. While some margin pressure emerged in some areas, this was offset by improved cost of doing business metrics. Food inflation has begun to rise across the basket but remains manageable. Activity strengthened through October and early November heading into the seasonally important festive period.

The outlook for FY26 remains positive despite macro uncertainty. Management continues to pursue bolt on acquisitions but remains disciplined, prioritising proper integration of recent deals to unlock growth and synergies.

Bidcorp remains financially strong, with low gearing, broad diversification and defensive characteristics underpinning its business model. Trading on a forward PE of 14.3 times, the stock rating still sits well below its long term average of 18.3 times, offering attractive valuation support relative to its consistent performance profile.

International picks

Axon (AXON)

Axon is the market leader in conducted energy weapons under the TASER brand. While the business initially focused on TASER devices, it has since expanded into body and in car cameras, a cloud based digital evidence platform (Evidence.com), and more recently records management and dispatch. Axon has evolved from a hardware manufacturer into a fully-connected hardware software ecosystem serving primarily law enforcement customers.

• The company's cloud based evidence ecosystem and subscription model underpin very low churn, with a client retention ratio of ~120%.
• Axon continues to broaden its ecosystem, with a growing emphasis on AI driven emergency response and drone security solutions, strengthening its competitive edge.
• International expansion, bolt on acquisitions and entry into adjacent markets such as federal, corrections and private security are expected to roughly double its near term addressable market.
• The company maintains a strong position within public safety technology, supported by an integrated ecosystem and high retention, though competitive pressures remain.
• Long term prospects are supported by dominant market positioning, accelerating ecosystem investments and expanding opportunities in AI and adjacent verticals.

In 3Q25, revenue (+31%) growth was driven by premium software adoption and strong demand for TASER 10, Axon Body 4 and counter drone solutions. However, margins softened due to a heavier hardware mix, reduced operating leverage and external cost headwinds such as tariffs and supply chain pressures. Still, Axon's pipeline remains robust, with future contract bookings at the time growing to $11.4 billion (+41% y/y).

Axon trades on a forward PE of 78 times, broadly in line with its long term average. We see substantial runway for growth, however. Management estimates a total addressable market of $129 billion against expected FY25 revenue of $2.7 billion. Current revenue remains concentrated within the US - state and local law enforcement, where penetration remains low at <15%, supporting notable future growth there and elsewhere.

Amazon (AMZN US, AMETNC, AMETNQ)

Amazon is a global technology and retail leader whose model integrates mass market e commerce, a broad third party marketplace, Prime subscriptions, digital advertising and Amazon Web Services (AWS). This diversified mix enables wide product selection, competitive pricing and fast delivery, supported by high margin growth engines in cloud and advertising. Its advanced logistics network, data driven personalisation and continuous reinvestment reinforce customer loyalty and long term platform scale.

• Despite solid earnings, Amazon has meaningfully underperformed the rest of the "Magnificent 7," reflecting investor concerns about slower AI progress versus peers, tariff related pressures on its globally exposed retail operations, and restructuring related costs following large layoffs. The company is in a high capex phase to close the AI gap by expanding data centre capacity and improving logistics efficiency to support faster delivery and long term retail growth.
• We remain constructive: Amazon's growth profile, margin expansion runway and deep ecosystem advantages support a robust long term investment case.
• The retail segment remains resilient, gaining market share through category expansion, a rapidly scaling third party marketplace and strong Prime engagement. The exit of underperforming physical formats allows greater focus on higher return areas.
• AWS remains central to value creation, well positioned for accelerating enterprise AI adoption. With $200 billion in remaining cloud commitments and new data centre capacity ramping up, analysts expect sales growth to accelerate into 2026 with margins staying strong.
• Advertising, Amazon's highest margin business at ~50% operating margins, is a major earnings tailwind, supported by Prime Video ads, retail media and more sophisticated attribution tools.
• Margin support also comes from Amazon's logistics transformation as it now delivers ~88% of US packages in house, reducing third party dependency and improving speed and cost efficiency. The Relay freight brokerage platform is increasingly disruptive within US logistics.

Amazon offers a powerful mix of scale, innovation, and high margin growth across cloud, AI infrastructure, retail, logistics and advertising. Its ability to convert AI demand into cloud growth, enhance marketplace economics, monetise its vast consumer ecosystem and continually optimise logistics underpins long term compounding potential.

With the share price derating over recent years, Amazon trades on a forward PE of 25.8 times, well below its long term average of 36 times, providing an attractive entry point.

Safran SA (SAF FP)

Safran is an international high technology group operating across aviation, defence and space, and is a leading global supplier of critical function equipment including aircraft and helicopter engines, launch vehicle propulsion, landing and braking systems, optronics, electrical systems, biometric solutions, explosives detection and safety components.

• The company operates through three segments: Propulsion (50% of revenue), Equipment & Defence (40%) and Aircraft Interiors (10%), serving global aviation and defence customers.
• Its largest revenue contributors are the Americas (~33%) and Europe (23%) excluding France (~19%), with additional exposure to Asia Pacific, Africa and the Middle East.
• Safran's broad customer base includes major aeronautics manufacturers, airlines, armed forces and space clients such as ESA, along with partners including Thales, Airbus, KNDS and BAE Systems. The company is also a key player in the military market, contributing to both ballistic and tactical missile systems.
• Amid heightened geopolitical tensions, from the Russia Ukraine conflict to rising intra NATO strains, European defence spending is undergoing its fastest expansion in decades. The European Defence Agency (EDA) notes member states are targeting defence budgets of 3.5% of GDP by 2035, up from ~2.1% in 2025. Much of this spending is being directed towards munitions replenishment, production capacity increases, and air and naval programmes, all areas closely aligned with Safran's core capabilities.

Safran's half year results were broadly in line with expectations. Organic revenue growth reflected a slower ramp up in Equipment & Defence (+8%) relative to Propulsion (+17%), with growth supported by the aerospace aftermarket as older fleets remain in service longer. Strong commercial momentum, robust civil aftermarket margin execution and operational improvement in Aircraft Interiors underpinned expectations for a stronger 2H25.

Safran is also positioned to benefit from a sustained capex cycle in commercial aviation as airlines accelerate fleet renewal and expand capacity to meet demand, supported by lower fuel costs and easing interest rates.

Safran trades on a 29 times forward PE, comfortably within its long term fair value range, but a discount relative to the broader European aerospace and defence sector.

Ferrari (RACE IM)

Ferrari is a luxury car manufacturer, based in Maranello, Italy. It holds one of the world's strongest brands, and maintains a brand image built around racing heritage, luxury, and exclusivity. Ferrari offers a model range that includes several supercars, grand tourers, and one SUV. Many early Ferraris, dating to the 1950s and 1960s, count among the most expensive cars ever sold at auction.

• Ferrari is a uniquely positioned and defensive business with Veblen good qualities. The order book currently extends through 2027.
• Ferrari boasts good, steady growth potential and has a history of strong execution and indeed revenue visibility. Slightly higher shipments will be complimented by price increases and special model launches (that fetch higher prices).
• The company can comfortably achieve high-single-digit top-line growth and double-digit profit growth with relatively low volatility to earnings.
• The company is long-term focussed with very clear near- and longer-term plans.
• The manufacturing process is tightly controlled. Ferrari only manufactures in Marinello where it still has ample capacity to expand. The manufacturing process is not automated and the focus on expert Italian craftsmanship distinguishes the company from its rivals.
• It still has a significant opportunity to grow organically via new customers, new segments and perhaps increasing its China exposure (~10% of revenue) as conditions there improve.
• Personalisation is a big (and growing) part of the business and is margin accretive.
• The financial performance has been impressive. In particular, margins are healthy, and returns have been consistently strong.

The share price has been under pressure over the last few months. The historically conservative management team failed to inspire investors at its investor day in October, with forecasts missing market expectations through 2030. Expectations have been revised lower, but we believe there is scope for upside surprises in results this year, particularly from the second half of 2026.

In terms of risks, the business is not fully immune to economic pressure, although less so than its competitors. Regulation is also uncertain and tariffs may have an impact if they have staying power (currently all models are presold through 2027, so the near-term impact is limited).

Ferrari is trading on a forward PE 17.9 times, well below its long-term valuation range. Despite tempered estimates, the sell-side is still overwhelmingly positive on the company with an aggregated target price of €384 - 35% above current levels.

Spotify Technology (SPOT US)

Spotify operates the world's leading audio streaming subscription platform, connecting millions of creators with billions of fans through a global freemium model spanning music, podcasts and audiobooks. Its personalised discovery algorithms drive deep engagement and position the service as a critical distribution channel for record labels and independent artists.

• A synergistic dual revenue model, Premium subscriptions plus advertising, maximises user acquisition and steadily converts free users into higher value paid subscribers.
• Its extensive global scale generates data advantages that enhance discovery algorithms and strengthen negotiating leverage with major labels and publishers.
• Expansion into podcasts and audiobooks increases engagement, supports retention and broadens revenue streams while easing reliance on traditional music licensing.
• The platform's scalability delivers strong operating cash flow, funding product innovation and selective content investments without compromising balance sheet flexibility.
• Competition remains intense, with Apple and Amazon leveraging ecosystem bundling to protect market share.
• Heavy dependence on licensing agreements limits pricing power and leaves margins vulnerable to shifts in royalty terms.

For 9M25, Spotify delivered strong profitability, supported by a robust 3Q25 contribution. Operating cash flow was also very strong, reinforcing its balance sheet strength. Operational momentum continued through Premium enhancements, such as limited audiobook access in select markets, while management remained focused on licensing cost control.

Roughly 80% of sell-side analysts hold buy ratings on Spotify, reflecting confidence in its growth trajectory and improving profitability. Trading on a forward PE of 35.4 times, the valuation suggests optimism is partly priced in but also signals expectations of sustained earnings growth going forward.