Take a look at these re­tail­ers

Well-man­aged trio will be able to lure for­eign in­vestors

Financial Mail - Investors Monthly - - Guest Column - Twit­ter: @Richard­s_Karin KARIN RICHARDS

Our re­tail­ers have been buoy­ant, driven by the stronger rand, a lower petrol price and the re­ced­ing prob­a­bil­ity of in­creased in­ter­est rates.

Are they still a buy for longer-term in­vestors? The technicals in­di­cate that sev­eral are — par­tic­u­larly the larger coun­ters, which ben­e­fit from the re­newed in­ter­est in emerg­ing mar­kets and the re­sult­ing for­eign flows into our qual­ity stocks.

Here I look at Sho­prite, Wool­worths and TFG. All are large, well-man­aged com­pa­nies with solid fun­da­men­tals and yields at­trac­tive enough to find favour with for­eign in­vestors. Sho­prite This is ar­guably our most at­trac­tive re­tail stock. Ex­cep­tion­ally well man­aged, it pro­vides a low-risk en­try point for for­eign in­vestors seek­ing ex­po­sure to the African con­sumer. At the time of writ­ing it was trad­ing at 208.70.

Sho­prite’s three-and-a-half-year con­sol­i­da­tion formed a gi­ant bull-flag (in red). A bull-flag is when the price range an­gles away from the pre­vail­ing trend, which is up.

It has em­phat­i­cally bro­ken out of this trad­ing range, set­ting up a tar­get of R228. The tar­get is the height of the flag pro­jected up.

It is now at­tack­ing the prior high of R205.75, set in De­cem­ber 2012. A prior high is usu­ally strong re­sis­tance and some con­sol­i­da­tion can be ex­pected. It may re­treat as far as R190.

Once it strongly clears the prior high, the sec­ond tar­get be­comes R255.

The long con­sol­i­da­tion and strong break in­di­cate a price be­yond R255 is pos­si­ble, but tar­gets will need to be de­ter­mined as pat­terns build.

Stop is a weekly close be­low R182. Longer-term in­vestors can use the 200-week mov­ing av­er­age, cur­rently at R165. The Fos­chini Group (TFG) TFG is well man­aged and trad­ing on a gen­er­ous for­ward yield of 4.4%. It can be ex­pected to at­tract sig­nif­i­cant for­eign in­ter­est. At the time of writ­ing it was trad­ing at R157.25.

It has formed a lovely Re­verse Head & Shoul­ders (S-H-S) with a tar­get at the pre­vi­ous high of R199. It may spike to just over R200.

The right shoul­der is “rest­ing” on the 200-day mov­ing av­er­age, which strength­ens the pic­ture.

Stop is a daily close be­low R149. Wool­worths This is al­ways pop­u­lar. The Aus­tralian dol­lar is strength­en­ing so the David Jones busi­ness should con­tinue to pro­vide good rand earn­ings. At the time of writ­ing it was trad­ing at R94.10.

Break of the im­por­tant 200-day mov­ing av­er­age was fol­lowed al­most im­me­di­ately by a break of the neck­line of an S-H-S. Such a dou­ble break is bullish.

Tar­get out of the pat­tern is R106.40, this be­ing the height of the pat­tern pro­jected up.

Stop is a daily close be­low R90.

The writer owns Sho­prite, TFG and Wool­worths shares

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