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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
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c Share Investor 2009 - 2010
Hi Darren,
ReplyDeleteI picked up some WHS stock today based on your recommendations in stock of the week.
Cheers I also think it is a great company.
Hi Anon, it wasn't a recommendation to buy but just a pointer to the price the stock was selling at. You did the rest:)
ReplyDeleteWhile the stock has been trading in the range of about what you may have bought it for today $3.70 odd to $4.55 ($3.75-$$3.82 today)for a while now it could go lower of course.
The price that you got it at today I think was a good one and with a gross return greater than 8% on today's share price with the dividends paid for the last 12 months I only see upside from here.
Long or short you will do well.