Coles Group – Finds Buying Support

Coles Group is under Algo Engine buy conditions and is now up 21.88% since being added to the ASX 100 model portfolio back in August last year.

We have since had a further higher low formation at $15 and new buying support is building.

We see limited upside based on the current valuation and investors are advised to apply a covered call strategy to enhance the income return.  For more details on the strategy, please call 1300 614 002.

Woolworths Group was added to the model in August 2018 and is now up 38.29%

Coles – Value is Approaching

Coles Group is under Algo Engine buy conditions following the August buy signal at $13.00.

Since then Coles has rallied to $16, supported by investor enthusiasm for the aggressive cost-cutting program.  As the stock price settles back we highlight the $14.50 level, as an area where value will again re-emerge.

Buy Coles within the $14.00 to $15.00 price range.


Coles – Valuation Review

Coles Group is under Algo Engine buy conditions and is a current holding in the ASX 100 model portfolio.

1Q sales results are tracking in line with guidance and we continue to see a relatively flat revenue and profit growth outlook for the Coles business.

FY20 revenue $39bn, EBIT $1.2bn and reported profit forecast is around $830mn. This places the stock on a forward yield of 3.2%, which looks like full value.

Adding an out-of-the-money covered call will help boost the cash flow returns to almost 10% per annum. For more detail on the strategy, please call our office on 1300 614 002.



Coles – Algo Buy Signal

Coles Group is under Algo Engine buy conditions and is now a holding in our ASX 100 model portfolio.

FY19 profit fell 9% to $1.43b, which was down from $1.58 the previous year.

The company declared a final dividend of $0.24 and a special dividend of $0.115.

We see support for the share price at $13, underpinned by the extensive cost-cutting program announced in the last quarter. Target cost savings over the next 3 – 5 years exceed $1 billion dollars.


Coles Group – Valuation Review

Coles Group has been a stand alone listed business since November 2018, after being spun-out of Wesfarmers.

The financial performance to date has been patchy at best and the recent Coles Strategy Day highlights were the confirmation of the dividend payout of 80-90% for FY19, (which translates to an estimated $0.55 per share or 4.1% yield) and the $1bn cost out program.

We forecast flat earnings and revenue growth into FY20 and suggest investors sell a covered call option to enhance the income return.