Stunning results today which gave a lovely inflated boost to the share price. Digging into todays numbers though I think we are in for a breather so after seeing my holding go from R15 four years ago I will be taking my profit tomorrow...........but I'll still be doing my food shopping here.
Just remember this share is still Well down from its high. Come the silly season in a few months I wouldn't be surprised if it recoups the loses it has made. We know it is increasing Market share, could this be at the expense of the Ackermans?
While I think that woolies is a great company and probably will deliver good results for the next few years, I would not buy it at such a high PE. When companies trade at such high PE's, it only takes a little bit of bad news for that price to come tumbling down. Unfortunately, many of our retailers are trading at similarly high or even higher PE's. Although Woolies clearly has a brilliant management team and strategy, they are not immune to changes in the economy. I think that if consumer spending were to slow down and/or the interest rate were raised a bit, investors would probably re-price the share with a lower PE, and if that's combined with a drop or slow down in earnings, it could bring the share price down. Long term (10 years +) though, it's probably a good company to invest in. omho.
J12, interesting thoughts on the PE...but have you looked at the PEG..less than 1 at 0.72. Problem is Woolies sells food also and yet finds itself being compared to Truworths and MPC...I prefer comparing it to SHP and PIK..so i have divided the retail part of my portfolio into MPC and SHP, to cover both clothing and food...If WHL was only food, then I would have gone for MPC and WHL. At current levels, I think SHP and MPC are buyable for long term....