Market Wrap - Stock Pick — Shoprite
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Graeme Franck from PSG Wealth Sandton chose Shoprite as his stock pick of the day.
"So in light of tomorrow, and my expectation for interest rates, I do think that blue chip retailers should rerate in a declining interest rate environment and it just generally better consumer confidence. So, I'm gonna go for Shoprite, it's been very disappointing over the last year to 18 months. I looked over earlier and it peaked at a share price of R266. I think it closed today at R157/R158, so it's down 41% from its peak and if you look at again purely on the valuation perspective it's trading on a 12-month forward p/e of 16 or 17 times it doesn't sound hugely cheap but it's always been up in the 20s high twenties and Clicks and Dichem, those are all in the 20s, high 20s and a blue chip like Shoprite should be trading a little bit higher than it is."
"So in light of tomorrow, and my expectation for interest rates, I do think that blue chip retailers should rerate in a declining interest rate environment and it just generally better consumer confidence. So, I'm gonna go for Shoprite, it's been very disappointing over the last year to 18 months. I looked over earlier and it peaked at a share price of R266. I think it closed today at R157/R158, so it's down 41% from its peak and if you look at again purely on the valuation perspective it's trading on a 12-month forward p/e of 16 or 17 times it doesn't sound hugely cheap but it's always been up in the 20s high twenties and Clicks and Dichem, those are all in the 20s, high 20s and a blue chip like Shoprite should be trading a little bit higher than it is."
