WOW - Woolworths Group

[noirua]

I can't help getting excited about WOW at the moment as growing profitability is shown in the recent results. Analysts are looking for a price of $30.50 but the shares may well be set to move on further than that. I have a sell plan at around $35 and expect the target to be reached in 2010, however, I was wrong last time.
The chart shows a sharp breakout from the downtrend that has surprised many as Coles looked to be doing better. I tell yee, "Coles, you are no President Woolworths."

 

[qldfrog]

WOW - Woolworths off market buy back

A probably stupid question but why would anyone want to sell back shares in the buy back instead of just selling on the market (saving 20$ of broker fee?)
Does not seems reasonable..
Any CGT advantage, I have had a quick read of the prospectus but still puzzled.

Any help welcome

 

[nulla nulla]

Going Ex-div didn't seem to do the share price any harm.
Does anyone consider that the present support for Woolworths could be indicative of share holders reducing their risky stocks for stocks like wow that are considered "safe"?
Seems to be at a bit of a premium to me at the current price level and in the present financial climate.

 

[lianeisme]

Seems to be at a bit of a premium to me at the current price level and in the present financial climate.[/QUOTE]

In this climate people still have to eat the choice of super markets are not abundant in Australia and New Zealand you really only have Woolworths or Coles.
In this climate people need to drive to get to work petrol is needed they also have a monopoly on that Caltex and Woolworths petrol.
In this climate people are staying home having parties or watching videos they buy alcohol for their enjoyment they also have a monopoly on this. They also own Dan Murphy's
In this climate people shop in more affordable stores for presents and clothing and everything else they also own Big W
They also own the Taverner Hotel Group, Bruce Mathieson Group, and Australian Leisure and Hospitality Group. Dick Smith Electronics, Dick Smith Power House, Tandy.
They are now branching into Hardware stores. So you have to ask yourself are we now in a different climate to 6 months, two years or 10 years ago is it expensive or is it cheap? Only you can be the judge, it all gets down to supply and demand. I hold these stocks and quite a few my stocks are not for sale in the short term so that supply has dried up, I’m sure there are a lot of other investors thinking the same. Mind you over a year ago I was not into this stock I was playing somewhere else.

 

[BSD]

Re: WOW - Woolworths off market buy back

A probably stupid question but why would anyone want to sell back shares in the buy back instead of just selling on the market (saving 20$ of broker fee?)
Does not seems reasonable..
Any CGT advantage, I have had a quick read of the prospectus but still puzzled.

Any help welcome

Buy back works for low or zero tax environment holders (allocated pensions). They get full benefit from the oversized franked portion of the buy back price and therefore their total sale price is greater than prevailing market price.

Risk is scaleback

Great move for WOW overall as they get to buyback stock at big discount to market using tax arbitrage.

 

[noirua]

Just ahead, round the next bend and we see the splendid $30 fence and in the lead, by a distance, are Woolworth. This time it's up and over and on to fence $31.
Seriously though folks, the new buyback is in the wings and about to flutter forth and give Woolies that bit extra to take us on to $32 - the fence that is.

 

[noirua]

A 4.1% rise in first quarter sales augers well for WOW and should hold the stock up after a Dow slide overnight in the USA.

In fact we are hoping ASF will holdup well at The Bull, we need your help: http://www.thebull.com.au/the_stockies/forums.html

 

[poverty]

Can anyone tell me why WOW has dropped so hard the last few days? Starting to look like good value to me.

 

[Dangerous]

Poverty, the buyback was scaled back hardcore leaving a lot of the big buyers with an overhang.

I bought a put on WOW at this time and used the simple calc of mkt cap pre-buyback and applied it to the new amount of shares on issue - i got 27.57 as the figure it would come back to. I got out of the short position at about 27.80.

I am, however, not at all surprised to see that it has overshot this mark. 26.50 is now in its sights.

I agree with you, unlike most stocks i do not trade this one. I accumulate it on the dips. It is in a defensive industry and Wesfarmers has too many non-performing subsidiaries for my liking. You should also look at Metcash (MTS) - IGA distributor and very healthy divs.

 

[poverty]

Thanks for the excellent response dangerous

If it goes south of 26.50 I'm definitely going to bet the farm on this one, I just can't see it remaining that low for long. Too bad it went back up a bit today!

 

[oldblue]

I wouldn't be looking to buy at the absolute bottom of any dip. I'm just not that lucky!

If I believed in buying WOW on the dips I'd regard this one - around 10% from recent highs - as a reasonable opportunity.

 

[Dangerous]

as much as i like woolies, the hardware move does concern me. It will cost a lot and I don't really see that big a hole in the mkt.

The other thing is despite there now being less shares on issue (after buyback) there is still a chance that they will keep dividend the same (not increase it proportionally) as capex increases.

 

[jonojpsg]

This has been a great stock to trade the swings on over the last year or two - bouncing between $26ish and $29ish a few times pretty regularly. Really should've taken the short when they hit $30 last time, was almost a given that we'd see $27 again IMO.

 

[ROE]

Can anyone tell me why WOW has dropped so hard the last few days? Starting to look like good value to me.

Don't think Woolie is cheap, I think it's fair value.

Don't confuse great fundamentals and great business with price.

Price is everything, you buy an extremely good business and over pay you
get under performance.

Look at Woolies since 2008 it hasn't move out from 26-30 range that, in my book it is under performing the market in the last 2 years and I reckon it could still be under performing next 2 years.

Great business, trade at premium I pass and at $34 it was a bubble
it could takes another 3-5 years before it get back to that level at currently grow rate...

 

[So_Cynical]

Don't think Woolie is cheap, I think it's fair value.

Don't confuse great fundamentals and great business with price.

Price is everything, you buy an extremely good business and over pay you
get under performance.

Look at Woolies since 2008 it hasn't move out from 26-30 range that, in my book it is under performing the market in the last 2 years and I reckon it could still be under performing next 2 years.

Price is everything however timing and time frame are also very relevant...WOW has underperformed over the last 2 years however "big picture" over 5 years its 50% in front of the ASX200...the GFC (market bottom) was hardly a blip in the WOW share price.
~

 

[Boggo]

WOW popped up in a larger degree trend ABC scan tonight if anyone is interested in that sort of thing.

Take note that the two small triangles were both valid entry and then both were stopped out trades so in theory already down $800.

Third time lucky ??

(click to expand)

 

[3aq1e]

What point are people going to load up on WOW shares, below $27.

 

[skc]

What point are people going to load up on WOW shares, below $27.

MTS has div yield of 6% and trading at PE ~14.6.

WOW has div yield of 4.26% and trading at PE ~16.5. Not to mention it has a fair bit of cap ex over the next few years to roll out the hardware big boxes.

WOW without great sales growth may need to support dividend yield at 5-5.5%. Say next year dividend goes up 10% to $1.26, the share price target will then be $23 to 25.3...

Having said that WOW still enjoys some market aura that deserves 10% premium.

So current price is kind of fair value I suppose.

I will load up below $22.

 

[Bean0]

Great business, trade at premium I pass and at $34 it was a bubble
it could takes another 3-5 years before it get back to that level at currently grow rate...

If this did occur, to me that seems to be a 3-5 year return (dividends + reinvestment + capital gain) of 9-13%. Given the solid nature of WOW what do others think about that sort of return?

 

[jonojpsg]

If this did occur, to me that seems to be a 3-5 year return (dividends + reinvestment + capital gain) of 9-13%. Given the solid nature of WOW what do others think about that sort of return?

As ROE pointed out, WOW is probably pretty fair value at current price...I'm thinking I might jump back in again as it is reaching the bottom of the range it has been in and should be heading back towards $28 again as people like yourself realise that it is a fair buy now.

As a longer term play though, buying at current price would be a reasonable thing to do...if I had an SMSF I would probably be considering putting a chunk into this...all IMO of course and I know very little