Likes
This week, CMC Markets’ Michael McCarthy likes Lovisa (LOV), a “fast fashion” retailer that specialises in pop up shops and low cost, short life consumer goods.
“I like Lovisa,” says Michael. “Targeting younger consumers, in my opinion LOV has demonstrated a way forward for bricks and mortar retailing by providing a quality that online retailers can’t match – immediacy. The price was far too frothy above $12 per share, but closer to $7 it looks like a potentially attractive price to buy,” he adds.
Chart 1: Lovisa
Source: ASX
ST Wong of Prime Value likes Collins Foods (CKF) because CKF’s KFC continues to deliver robust growth, despite softer conditions in Western Australia.
“We expect CKF to make KFC store acquisitions over the medium term, which would add to the company’s growth profile,” he said.
“Whilst we are less enthusiastic about CKF’s European growth opportunities, the early signs of expanding the Taco Bell franchise in Australia looks positive,” he added.
Chart 2: Collins Foods
Source: ASX
Dislikes
Michael doesn’t like Washington Soul Pattinson (SOL).
“Don’t be mistaken,” he says. “SOL is a top performer and a consistent deliverer of stronger returns. The problem is that many investors appear to have realised this about SOL all at the same time. The share price around $30 looks over cooked to me. Happy to take profits here with a view to buying back in at lower levels,” he adds.
Chart 3: Soul Pattinson
Source: ASX
And ST doesn’t like Domino’s Pizza Enterprises (DMP). “DMP is trading at just under 30x FY19 earnings (which is expensive) and will post broadly softer sales and new store openings,” he said.
“We expect new store roll-outs in Australia to slow, and ‘store-splits’ potentially adding to profit margin pressures,” he maintained.
Chart 4: Domino’s Pizza Enterprises
Source: ASX
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