Tuesday, January 19, 2010

Stock of the Week - Reprise : The Warehouse Group



In this Stock of the Week we are going to be looking at New Zealand's dominant general retailer The Warehouse Group [WHS.NZ].

I picked it in June 2009 as a Stock of the Week and am including it again in 2010 for much the same reasons.

It has been trading at a pretty steady share price for the last 12 months (marking time until news about its sale is forthcoming) at a range between NZ$3.00 - $4.55 and represents value whether you want it for a quick buck for its probable sale or if a sale falls through and you want a good solid company for the long term portfolio.

It approached around the middle of that range, closing at $3.88 today.

On its long-term merits the company has a dominant position in its sector of the retail market and a great cash flow that helps contribute to a gross dividend north of 8%. Spectacular in these days of 3-4% returns for term deposits or 5-6% for rental property.

Retail is struggling these days but that isn't going to last forever and The Warehouse is coping well with the current recession. It historically does well in recessions because of its low price perception.

Its 2009 Christmas trading period was flat in terms of sales and that is no surprise as other retailers experienced similar trading. The key will of course be the margins.

The company has recently met its own forecast for profit in its October release of its 2009 full year profit (see 2009 annual report for details) and its forecast for FY 2009 is on track to meet last years profit of $90.76 million.

I am looking at taking the plunge again to add to my holding.

Good luck!

Disclosure - I own WHS shares in the Share Investor Portfolio

Stock of the Week Series

Reprise - Contact Energy Ltd
Restaurant Brands
NZ Refining
Ryman Healthcare
Mainfreight Ltd
Fisher & Paykel Healthcare
Xero Ltd
Auckland International Airport
Sky City Entertainment Group
Burger Fuel Worldwide
Michael Hill International
Contact Energy Ltd
The Warehouse Group
Fisher & Paykel Appliances
Stock of the Week: Telecom Ltd

The Warehouse Group @ Share Investor

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Woolworths seek leave to appeal to Supreme Court
Warehouse appeal decision imminent
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Warehouse Court of appeal decision in Commerce Commission's favour
MARKETWATCH: The Warehouse
The Warehouse takeover saga continues
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History of Warehouse takeover players suggest a long winding road
Court of Appeal delays Warehouse bid
The Warehouse set for turbulent 2008
The Warehouse Court of Appeal case lay in "Extras" hands
WHS Court of Appeal case could be dismissed next week
Commerce Commission impacts on the Warehouse bottom line
The Warehouse in play
Outcomes of Commerce Commission decision
The fight for control begins soon

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