Stock Watch - Stock Picks - Shoprite and FirstRand
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Chantal MaChantal Marx from FNB Wealth & Investments chose Shoprite (SHP) as her stock pick of the day and Paul Chakaduka from GT247.com chose Firstrand (FSR)
Marx says that Shoprite experienced the perfect storm over the last six months to a year where they had some very serious security losses at their businesses. They also had a DC strike that dragged on. They implemented new information technology software which also dragged on their results. Shoprite had almost null food inflation which had an impact on their top line meanwhile your expenses continue to grow, even if it's below inflation it still has a very negative impact on margins and we believe that it is kind of in the base now and we don't expect these one-offs to repeat again. The share looks very attractively priced now relative to its history. If you run a model and do a fair value assessment now it's trading well below fair value at the moment. And, even in the context of poor economic growth in South Africa, people still need to eat.
Chakaduka chose Firstrand and said, "We want to go long FirstRand, they found their base and bounced off their recent lows. I don't think there is anything fundamentally that is going to change from now and their next set of results in three or four months time. What has changed though is the economics and the politics around which will give a lot of the banks some breathing room.
Marx says that Shoprite experienced the perfect storm over the last six months to a year where they had some very serious security losses at their businesses. They also had a DC strike that dragged on. They implemented new information technology software which also dragged on their results. Shoprite had almost null food inflation which had an impact on their top line meanwhile your expenses continue to grow, even if it's below inflation it still has a very negative impact on margins and we believe that it is kind of in the base now and we don't expect these one-offs to repeat again. The share looks very attractively priced now relative to its history. If you run a model and do a fair value assessment now it's trading well below fair value at the moment. And, even in the context of poor economic growth in South Africa, people still need to eat.
Chakaduka chose Firstrand and said, "We want to go long FirstRand, they found their base and bounced off their recent lows. I don't think there is anything fundamentally that is going to change from now and their next set of results in three or four months time. What has changed though is the economics and the politics around which will give a lot of the banks some breathing room.