JB Hi-Fi Short Sellers Retreat

JB Hi-Fi is under Algo Engine buy conditions and was added to the ASX 100 model in late 2017.

JBH was one of the top performers in March, rallying over 15%. Part of this strength can be attributed to short sellers buying back, or closing out their positions. This is reflected in the fall in data on “open shorts” in JBH.

 

 

 

Algo Update – JB Hi-Fi

Strong retail data supports JB Hi-Fi and we believe the share price represent good value over the medium-term .

JBH has gone ex dividend today for 46 cents, which represents a forward yield of 5%.

We see solid chart support in the $24.80 to $25.00 range.

JB-HI

Algo Selects – JB Hi-Fi over Harvey Norman

A stronger consumer environment at the back end of the financial year has helped JB Hi-Fi.

Our Algo Engine generated a buy signal recently at $22.00 and the stock was added into our ASX100 model portfolio. We continue to prefer JBH over HVN.

JBH goes ex-div $0.46 on the 23rd August.

 

 

Big Miss In Retail Sales

Local economists had expected Australian retail sales to have grown by around 0.3% after a flat report in July.

Instead, retail sales fell by 0.6% in August, and, adding insult to injury, revised the July report to show a 0.2% decline. It is the first back-to-back decline in five years.

Retail names HVN and JBH have both seen their share prices drop over 15% since mid-August and yesterday’s report won’t likely give them a lift.

Over the medium-term, we see scope for HVN to trade back to $3.65 and JBH to slip to $21.70.

 

Harvey Norman

JB HiFi

 

JB Hi-Fi 1H17 Result

JB Hi-Fi  1H17 earnings results  beat expectations driven by strong sales and  gross margin expansion.

1H17 underlying NPAT of $125 million represented growth of 32%. Assuming FY17 EPS of $1.87, it places the stock on a forward yield of 4.1%.

Our Algo Engine generated a buy signal in both retail names back in December.

Chart – JB Hi-Fi
Chart – Harvey Norman

 

 

 

Retail and Transport

Let’s take a quick look at a few names that should prosper from the Christmas period spending activity.  In the US I’ve focused on Amazon and FedEx as two relevant examples and domestically, I’ve looked at Harvey Norman and JB HI-FI.

We had buy signals from the algo engine on these names and our preference was the long position in HVN, which has now rallied 10% from the November low.

Chart - Amazon

Chart – Amazon

FedEx
Chart – FedEx
Chart - Harvey Norman
Chart – Harvey Norman
Chart - JB HI-Fi
Chart – JB HI-Fi

Harvey Norman – Algo Buy Signal

Harvey Norman and JB Hi-Fi have sold off recently and now reflect at a “higher low” price formation within a broader uptrend. Our algo engine has triggered buy signals on both of these names, so we will take this opportunity to look a little closer.

Harvey Norman reported a solid Q1FY17 trading update, yet the share price has sold off over 15% following questions being raised over the group’s accrual accounting practises. The strong history of free cash flow generation should begin to dampen investor concerns and lift share prices.

FY17 revenue is likely to be up 7% year-on-year to $1.9b, EBITDA $650m and NPAT $375 which will be up 10% on FY16, placing HVN on a forward yield of 7%.

Momentum studies suggest HVN is worthy of consideration: FY15 to FY16 EPS growing by 25% or from $0.24 to $0.30 per share.

hvn
Chart – Harvey Norman
Chart - JB Hi-Fi
Chart – JB Hi-Fi