WOW 0.02% $43.51 woolworths group limited

woolworths is cheap as chips

  1. 3,567 Posts.
    Just doing some more research into Woolies and it looks ripe for purchase.

    Growth prospects:

    1) The newly signed deal with Caltex. WOW will supply the convenience stores and the joint venture will be EPS postive for WOW from the outset.

    2) Pharmacy: This will be a big driver for WOW as it's a multi-billion dollar business in Australia and WOW have the ability to steal a large chunk of the market. They will be able to cross sell many many more higher margin products (e.g. health and beauty products).

    3) Project refresh II: Might sound boring but gee cost savings will be nice to see. WOW will pass half the savings back to consumers in the form of lower prices and the other half to shareholders. This will have a leverage effect as it will in turn boost sales and the margin at the same time.

    4) Organic growth: Their ability to grow organically has been proven time and again. No wonder stores like Big W are the fastest growing department stores in there area!!

    5) share buy back. Not a huge deal but every 4% of stock WOW buys back are shares that are not there any more. Boosts EPS and return to shareholders.

    All this talk of a takeover isn't that far fetched. Overseas companies were interested in WOW a while back. They have a leading brand name in Australia and are only now using it to full potential e.g. Petrol, Pharmacy... what else do they have in store??

    Looking at other retailers like Harvey Norman which is an excelllent company, has a forward PE of 17.6 but carries a higher risk due to the link with the housing cycle. WOW only has a PE of 17 (forward) but carries a lower risk with better growth potential.

    So all in all I think WOW will rally 30% in the near term as the market gains confidence in the WOW growth story. Excellent brand names like WOW are worth a fortune. Not because of current sales but because of the potential which WOW is now realising.
 
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