Dischem (DCP:JSE) has pulled back considerably in the past two weeks to its May 2018 low. This isn’t on any company specific news but a broader sell off in the related retail stocks following lacklustre results. Clicks trading update for the 20 weeks to 13 Jan 2019 weren’t fireworks but highlights consistency and a demanding valuation.
Dischem’s results for FY 2019 due in May should show significant improvement based on management’s guidance last year for achieving almost a full rand in earnings. That will put DCP on a PE of around 26 versus Clicks at 32.15.
Buy DCP below R25.50 for a move to R29.50 with a longer-term target around R37.50
The week ahead:
- Local Data: M3 Money Supply, Private Sector Credit, SA Budget Data (30/01); PPI, Trade Balance Rand (31/01); ABSA Manufacturing PMI, Naamsa Vehicle Sales (01/02)
- Results Due: ACL, AVR, ELI, GLI, MIX, SNH (31/01); ECS, HDC, SAP (01/02)
- LDT (29/01): ASHINF, ASHMID, ASHT40, NPKP, NPP1, PFG
Other Economic data releases of interest…
- Tuesday: CB Consumer Confidence (USA)
- Wednesday: CPI (AUS); Federal Funds Rate (USA)
- Thursday: GDP (CAN)
- Friday: Average Hourly Earnings, Unemployment rate, Non-Farm Employment Change (USA);
Short Term Ideas
- Sasol: Buy below R430, target R460.00 (Longer term profit target in update below)
Long Term Ideas
- Sasol: Long term buy below R430. Target R550.
- AB InBev: Buy below R1,000 with a target of R1,500
- Richemont: Buy dips below R95. Target R130.00.
- Remgro: A break above R210 is needed to open up R230. Buy below R200.00
- Coronation: Sentiment still negative. Buy dips below R50.00 for a move back to R80
- Shoprite: Stuck in Trading range below R200. Hold.
- Aspen: Bottoming out. Add below R150.00, keep exposure appropriate.
- Sygnia: Moving in the right direction. Add below R8.
- MTN: Accumulate on dips below R80.
- Glencore: Buy below R52.50.
- Naspers: Break out imminent, buy below R3,000. Target R3,800
Investors looking to take advantage of the stronger Rand and gain offshore exposure with limited downside should contact us as new product launches close soon. Email firstname.lastname@example.org