Woolworths Ltd (WOW)

Discussion in 'Stocks & Derivatives' started by finicky, Oct 8, 2014.

  1. finicky

    finicky Well-Known Member Silver Stacker

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    WOW continued its trend of growing eps and divs annually in fy14

    5 Year Growth Rate
    Dividend Per Share +5.4%
    Earnings Per Share +4.6%
    Equity Per Share +7.3%

    At around $33.70 its p/e on fy14 earnings is 17, its yield is 3.8%ff which is equivalent to 5.4% interest on money in the bank

    Return on Equity (%) 36.50 25.20 24.50 27.20 27.00 26.70 28.50 33.50 26.00 23.90
    Fin Years: 2005 - 2014

    Woolworths is one of a small list of favoured ASX stocks by stocksinvalue.com.au (online valuation by Clime Asset Mgt) which rates it as financially healthy, low business risk, and currently undervalued by 19% based on estimated fy15 earnings

    I suspect there is a bit of momentum in the share price correction. There is a line of support at 33.50 which has fair chance of cracking, although maybe ready for a bounce beforehand. I'm seeing 32.50 as likely should 33.50 crack, which I also see as more likely than not. Down there at 32.50 it would seem a nice buy for fairly secure dividends that grew even through the GFC. Woolworths seen as probably Australia's best defensive stock being in mostly non discretionary retailing and advantaged by scale and presence in many of the best store locations. It is a beneficiary of population growth.

    2 year weekly chart
    [​IMG]
     
  2. Holdfast

    Holdfast Well-Known Member Silver Stacker

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    Very good outlook for WOW.

    Once their Masters Stores become profitable, Woolies could do even better. (Buy the way...don't forget to check your Woolies receipt / docket as they give 10% off at Masters) :cool:

    This is a stock for those who can wait for an over-sold market. (That's if we get a decent crash) Good idea to have a bit of cash stuck away for WOW. :)

    I don't own the stock, but.... ;) :)
     
  3. jeffro

    jeffro New Member

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    I think WOW does have a bright future as there only direct competition is coles , though I think coles is the better run of the two. I hope we do get a decent correction as I would love to pick some up in the high 20s !!

    I don't own the stock either.
     
  4. finicky

    finicky Well-Known Member Silver Stacker

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    My rationale for expecting a lower entry price for WOW has largely evaporated. The week after my initial post WOW made a wide ranging bullish engulfing candle on the weekly chart. Good volume too.

    As with Ainsworth Gaming (AGI), again my view is in disagreement with Michael Gable who interpreted that WOW had retreated to the midway point of a preceding triangular consolidation pattern and then thrown the bullish engulfing candle mentioned - he had the advantage as my post 8/10, his vid 20/10. I'll assume I called it wrong should WOW close a week above $35.50. Until then it's still game on as there remain weaknesses in the monthly chart. I won't be buying at such a price as too little margin of safety imo.

    M Gable's view on WOW can be seen at 3m05s in the vid : The bluechips edging higher October 20

    [​IMG]
     
  5. finicky

    finicky Well-Known Member Silver Stacker

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    That's reassuring - 'Between the lines Finance' is seeing it somewhat like I am for WOW. He thinks it'll soon to continue down. Also expecting a resumption of downtrend for ASX200.
    WOW commentary Comes in at 3m50s

    [youtube]http://www.youtube.com/watch?v=INa36wKvvXM[/youtube]
     
  6. finicky

    finicky Well-Known Member Silver Stacker

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    Broader monthly weaknesses in the chart have now manifested on the daily scale. Catalyst was 'lacklustre' sales growth just reported for this Quarter.

    A way to look at it is that the price 'pennanted' around $35, so instead of rolling over from there as I expected continued the uptrend to 36. From there two days of gapping down has undone 14 days of rally.

    Now to see if the prior low of Oct 13 (~33) holds or is broken to bring into view a more buyable price for WOW. Don't feel like tipping it now as it has not behaved very predictably!

    [​IMG]
     
  7. Caput Lupinum

    Caput Lupinum Active Member Silver Stacker

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    Got hit in the nuts by the ACCCs ruling over fuel shopper dockets affecting sales. On the plus side their Masters hardware sales may have turned a corner. I can't see this being a sustained fall in WOW shares or at least I hope not as I'm holding. I may consider adding more shares if it dips much more.
     
  8. SilverSanchez

    SilverSanchez Active Member

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    With the RBA keeping rates on hold (2.5%) for the future, a 4% yield isn't that bad.
    You may roll the waves of price fluctuations but look at WOW over the financial crisis - its def a long term hold and a good defensive stock.
    So until something bad happens, why would you worry just because they made a 3% growth.

    Its at about a 17P/E when the average market is 15 - so a little selling and rebalancing is expected
    Masters sales was up 20% wasn't it?
    WOW is a decent company to hold as far as I can see. I don't have any because I cant find a good buy in price - there may never be one, it might be one of those shares you just buy
     
  9. finicky

    finicky Well-Known Member Silver Stacker

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    $33 might be going

    [imgz=http://forums.silverstackers.com/uploads/1893_wow_nov_18.gif][​IMG][/imgz]
     
  10. finicky

    finicky Well-Known Member Silver Stacker

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    Now at offer of $31.30
    stocksinvalue currently says worth $39.78 based on predicted fy15 results, trading at approx 25% discount to intrinsic value. Note that's "currently", can change quickly, however WOW pretty predictable earnings.

    Gapping down, no obvious support in sight, risky 'technical' buy here. My opinion.

    [imgz=http://forums.silverstackers.com/uploads/1893_wow_nov_20_3_mth_dly.gif][​IMG][/imgz]
     
  11. Holdfast

    Holdfast Well-Known Member Silver Stacker

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    Much further to go.
     
  12. silver kook

    silver kook Active Member

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    Down another 3 per cent today. What is going on??? Has been hammered in the last few weeks.
     
  13. finicky

    finicky Well-Known Member Silver Stacker

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    Don't know. Most of it is probably profit taking, stop-losses from the substantial rally since Sept 2011. Woolies was uptrending strongly for 30 months up to May this year and has now retraced about 50% of that uptrend.

    Little things like the issue explained in this article don't help sentiment either:
    Woolies' November Blues Continue

    [​IMG]
     
  14. Caput Lupinum

    Caput Lupinum Active Member Silver Stacker

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    I'm eyeing off the $29.00 level
     
  15. silver kook

    silver kook Active Member

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    If it hit $29 would it be worth topping up?
     
  16. SilverDJ

    SilverDJ Well-Known Member

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    If it hits that then I'm certainly getting some more. I've got WOW in my super fund, so definitely a long term thing and am mostly in it for the dividends, but it doesn't hurt to pick up more cheaply.
     
  17. Holdfast

    Holdfast Well-Known Member Silver Stacker

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    No...it's going lower than that mark my words.
     
  18. dozerz

    dozerz Well-Known Member Silver Stacker

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    pick the bottom? interested in your target.
     
  19. Holdfast

    Holdfast Well-Known Member Silver Stacker

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    The problem with defensive stocks they have to be defensive.

    Woolies is going through a massive change atm which investors don't like.

    When the market allocates fair-value, will be when, they decide the overall "new" value of Woolies.

    Most folk see woolies as the Fresh Food People but their involvement in fuel, booze, hardware etc add to the picture.

    It's well known that Masters is dragging the chain and of course, the massaging of the fuel stations is a bit of a concern.

    Sure...companies need to grow and sometimes, profits take a dip but imo, management have got too many toes in the pool.

    If management bring stability in the fuel chain and if Masters, at least breaks even, then...that's what folk want.

    How low will the price go?

    Profits / break-even from Masters is expected 2016

    New Star branding and re-org of fuel???

    Anything can happen from now till 2016.

    Will the price sore because of the restructuring?

    Will world stock markets correct while Woolies is re-org?

    A price?

    When you decide it's fair value.
     
  20. finicky

    finicky Well-Known Member Silver Stacker

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    Interesting short term burst of buying off $30.75
    This is the hourly chart over 10 days.
    $30 is a very natural level for it to bounce off, especially as momentum indicators (on daily chart) reveal oversold level where rallies have occurred. There is some past resistance at $30 level
    Whether its the final low, not confident to say.
    I've decided to stay clear for time being, but that's because I'd rather sell something else to fund a buy and nothing presents as a good sell right now. If I were interested in accumulating some WOW I'd start with a few around here. However I'm nowhere near across any fundamental issues challenging the company - my interest chart based.

    Disclosure: Holds
    Sentiment: accumulate

    [​IMG]
     

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