Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi James and Team Can I have your current view on Super Retail. SUL has traded ex dividend this week so I have received the dividend. However, being consumer discretionary would you continue to hold or sell into the strength its shown since reporting? Do you have a target price to sell at? regards Debbie
Hi Debbie,
As we said last month Super Retail (SUL) is a stock MM has liked for a while, it owns Supercheap Auto, Rebel Sport, BCF & others. Last month it beat market expectations with its 1H earnings with sales up 11% and a significant drawdown in inventory which helped margins. In our opinion, the stock is not too expensive trading on a 11.4x valuation plus we like its forecast to yield 6.4% over the next 12 months.
While consumer discretionary stocks are bracing for the headwinds of rising mortgage rates as we see a dramatic transition of homeowners forced to switch from fixed to variable loans forcing people to rein in their spending, the solid retailers that are selling smaller items have proven to be very resilient. If we held, we would be more inclined to stick with it while we would be interested buyers ~$12 or 8% lower.
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