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Does MM still like Metcash (MTS) after recent falls?

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Does MM still like Metcash (MTS) after recent falls?

Would appreciate your thoughts on Metcash. Share price has been dropping on a regular basis over the last two weeks. Also trading volume has increased,which makes me wonder whether there are large fund managers looking at reducing same. Coles/Woolworths have also decreased over the past weeks, however no where to the same extent. Regards John


Hi John,

Short answer is yes. We think MTS is oversold  and around $3.60 is solid buying. Weakness has resulted from:

1. Macquarie downgraded to HOLD from BUY, with Macquarie having a previously strong bullish thesis on the stock. They now think Aldi is winning market share from IGA.
2. General sell-off in retailers with a lot of the perceived upside in Metcash driven by their hardware division, which is more discretionary than their grocery business.

We hold MTS in the Income Portfolio and think the risk/reward here looks good.

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Metcash Ltd (MTS)
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