It is not just pent top demand. I think many underestimate how much of the nations discretionary spending was previously allocated to overseas holidays. All that money is now being spent on other discretionary items instead, a big chunk of it in the form of retail goods, and another big chunk in money heading into the Stockmarket.
And they say bank deposits are increasing as well.
”When investors are euphoric, they are incapable of recognising euphoria itself “
HLG share price going nowhere ...maybe mid 660’s is as high as it’s going to get (a la waltzingman)
And no signs of anybody ‘backing the truck up’ either
So a reminder of why punters should still be buying HLG. A few extracts from Beagles recent posts -
They had a cash mountain of around $50m as at balance date which I expect to be very similar at the conclusion of the current half year and equates to a whopping 83 cps. Based on likely earnings in the current period and their very robust cash position I am forecasting a fully imputed April dividend of around 24-25 cps.
And
Briscoes now on 18 times last years Covid affected earnings. A similar multiple would have HLG at $8.42. One has outstanding growth prospects in Australia the other does not. Hmmm
And
There are a range of uncertainties but I am modelling up about $24m for 1H FY21 up just on 50% on last years $16m and amounts to ~ 40 cps. Who knows what the dividend will be but they have truckloads of cash already, no debt and I am sure it will be dramatically higher than last years 15 cps.
This is based on sales for the first 26 weeks continuing to grow at the same rate as the first 18 weeks (14.5%), and the gross profit percentage increasing 1.8% back to the level prevailing in 2018 of 61.5%. These two factors alone add $16m in gross profit for the half year. Increased percentage of sales though online channels will add distribution and selling efficiencies.
Enough retail evidence out there now for me to be very comfortable that my projections are very conservative. I see considerable upside in 2021. Happy to let my 15% portfolio allocation run well north of its own accord and expect it too. I made a small top up last week.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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