Not meaning to rain on the ramping parade, but this cyclical has massive capital swings and is in the top zone right now, heavily over bought on all TA metrics. If it breaks up great, but history says if it doesn’t, well buyer beware. A delicate balance happening now
Not holding, it’s too volatile for me. Those who don’t care about capital value and have the stomach for sustained earnings regardless of share prices should be able to withstand any volatility, not me though at any yield.
Bolly bands coming together, toss a coin to determine which way its going to go.
Thanks Ferg for posting your thoughts and assessments.
You're welcome, happy to share and I enjoy reading your analyses.
The other factor I look at is depth, i.e. bid versus offer volumes and support/resistance points based on live market depth data. If the numbers look good that is 1 less objection. Where the numbers are bad (i.e. sellers outweigh buyers at certain price points) then I won't buy until the numbers shift. Otherwise it is like trying to catch the falling knife (which I once did and ended up stabbing myself in the foot, rather than the hand). I'm trying to measure demand versus supply on the assumption it is an indicator of future price movements and/or there is some support if I want to bail.
I have a few shares on my watch list that are popular on this forum but in some cases sellers outweigh buyers by factors from 2:1 to 4:1 so I won't buy until I see a swing in nett demand, irrespective of the fundamentals. It's a crude measure and I'm trying to avoid the reverse Midas touch I frequently have.
But back to HLG, buyers have outweighed sellers between support/resistance levels for some time by factors of around 2:1 (factors of 190%-230%). I reckon such numbers create short term price strength. However, these numbers have recently turned where resistance sellers outweigh support buyers such that buyers/sellers is about 85%. So I expect to see some minor short term weakness until the next "event" that either reverses or amplifies the current weakness. The "event" could be anything like the US election for instance (edit: which confirms couta's & Baa Baa's comments that the SP can go either way from here).
All extremely boring I know and very unemotional but, before I part with my money, I want to know what I am getting myself into.
Nice work there Ferg. Some of those industries you've listed there are of course the likely recipients of cheap mortgage money, which is exactly what our friend Grant has been gunning for in the hope that low interest rates mean home owners enjoy a wealth effect and borrow and spend accordingly, with the resultant trickle down keeping things bubbling along. Not sure how far the trickle needs to go before it hits HLG's coffers, but I'll run with it.
Meanwhile it's good to see the HLG SP seems to be relatively immune to the current market nervousness. Bucking the trend even.
Thanks and agreed. Regarding the the bold part: there are other companies that will benefit more immediately from the stimulus, but I would expect a small trickle due to disposable income. On another note I'm also seeing increased staff employment with my clients and new hires are hard to come by. This is putting pressure on wage budgets.
BA BA , short hand, is correct but in 2019 the share price DID not sell off as it often does and went up for a full Year until the GPD. It actually follows no pattern except skittishness. It a stock that get scared and then rebuilds itself. It like an a cat in a garden it doesnt own.
I dont think TA matters much at the moment as the TA doesnt really cater for global events of this magnitude.
If you did drawn line it would be at about 5.50 as the next lower support level.
it will take a big spike in unemployment and a drop in next quarter GDP and credit/ Pos card retail spending to take it under that level at pace.
Hey Ferg =, good insights. I'd add to your industry insights that paint sales are booming and Mitre 10 Mega / Bunnings sales are miles ahead of last year
You might be interested in these 2 charts using same Stats NZ ans ABS data
Shows that apparel / clothing sales have yet to recover to pre Covid levels. There are updates to each this week so that will be interesting
Even more amazing that HLG sales for August/September are up 11% on last year ...and what may happen if things get back to normal
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Not meaning to rain on the ramping parade, but this cyclical has massive capital swings and is in the top zone right now, heavily over bought on all TA metrics. If it breaks up great, but history says if it doesn’t, well buyer beware. A delicate balance happening now
Not holding, it’s too volatile for me. Those who don’t care about capital value and have the stomach for sustained earnings regardless of share prices should be able to withstand any volatility, not me though at any yield.
Its worth observing that interest rates are a LOT lower than when this went above $6 in 2018 and 2019.
PE's of other retailers WHS and BGR average 14.3 and illustrate my point that PE's have expanded because of ultra low interest rates.
Even if earnings were unchanged in FY21, (and I am very confident of solid growth), this is worth every bit of the 14.3 PE ascribed to the other retailers in my opinion.
14.3 x 48 cents = $6.86 + 24 cent divvy next month = $7.10.
My money is firmly on this hitting a new all time high in the year ahead.
Disc: Topped up some more yesterday.
Last edited by Beagle; 03-11-2020 at 10:01 AM.
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
The sector not performing is new car sales but apparel up slightly up on NZ quarter GDP. If they arnt going to expand in AUS then they will have to pay out a small top up in DIV which could support the Price. If they do the same reporting as in 2018 then you might well see a sell off and then a rebuild in share price.
You could use the sell off to top up! Because the balance sheet is very very strong. Heck who cares if brothers stays where it is.
Hey Beagle - I reckon you need to revisit your forecast for F21
A bit of a flaw in your logic - you extrapolated the 10% increase in sales for first 12 weeks to get a full year sales figure - but that overlooks that H2 was down 6%. Doesn't that mean that that H2 (if things don't turn to custard) will be much stronger this year.
Briscooes last quarter sales up 15% - retail in NZ on fire ...and watching Melbourne Cup coverage the ladies are buying new dresses to go Cup parties ....though Delta Goodram should buy some decent clothes from Glassons to replace that indecent outfit she's got on today.
And NZD v USD getting stronger - could be 8%/10% more favourable to HLG this year
Maybe npat $45m not beyond bounds of possibility?
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
WOW...Delta's sure going to get some attention in that outfit !
Yeah saw that Briscoes sales data....its seems to me ultra low mortgage rates, inability to spend money on travel and the stimulus money is really igniting retail sales !
Looking forward to HLG's December sales update and annual meeting.
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
Originally Posted by Baa_Baa
Reply With Quote
Bookmarks