WOW has rallied over +25% from its 2022 low and is currently trading on 27.4x FY23 earnings, well above its historical average hence we are unlikely buyers over the coming months i.e. we believe if/when the market becomes increasingly optimistic, overpriced defensive stocks will struggle. WOW may be a quality defensive stock and business but in our opinion, it’s simply too expensive around $38.50.
- We like WOW as a quality defensive play but not the risk/reward until the ~$35-36 area – WES reports on the 24th of this month.
- We own Consumer Staple names Metcash (MTS) and Wesfarmers (WES) in our Active Income Portfolio for their strong and sustainable yield with neither scanning as expensive as WOW
MM is neutral at best towards WOW around $38.50
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