RCG Corporation as a Long-Term Hold?

Hi,

What are your thoughts on buying RCG Corporation as a long term hold?

 

A: Thanks for the question on RCG Corporation.

Footwear/apparel retailing is not an area I have any domain expertise or an area that I see as having any tailwinds, so RCG Corp is not on my radar.

Of the major brokers that cover the stock, both have neutral recommendations. Cit has a target price of 90c, Morgans a target of 81c. (last price around $0.74)

Pricing metrics are cheap – FY18 PE of 10.7, FY19 PE of 10.6. Yield on paper at 7.6% is high.

Putting the Amazon risk to one side, it is cheap – but that said, I don’t see that as a sufficiently compelling reason to invest.

 

regards


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