Question: I have many shares with Harvey Norman (HVN). With Amazon heading to Australia, do you recommend I sell or keep them? If you think I should keep them, what are the reasons? What percentage of Harvey Norman would you keep in your portfolio, considering Amazon is heading our way?
Answer (by Paul Rickard): I do hope you saw the article in Monday’s Switzer Super Report about Amazon. I thought this was particularly insightful.
Apart from some insiders, no one knows how Amazon might approach the Australian market. The impact on retailers such as Harvey Norman and JB Hi-Fi could be quite low in the medium term, particular if its initial approach is through fresh food.
The market has already started to sell Harvey Norman and JB Hi-Fi ahead of Amazon’s arrival.
What percentage do you sell? An impossible question to answer because I don’t know what you have, but I would be surprised if your Harvey Norman shares were more than 5% of your portfolio.
regards
Question: Does anybody recommend Cabcharge (CAB) as a buy?
Answer (by Paul Rickard): Not a company that I can get excited about. I think the industry headwinds are pretty strong.
Two major brokers cover the stock:
- UBS rates it as neutral, with a target price of $3.95 (currently around $3.98).
- Macquarie rates it as neutral with a target price of $3.54.
Interestingly, they collectively forecast declining EPS, from 21.3 c in FY16 to 19.8c in FY18. First half underlying EPS in FY17 was 10.1c, down from 12.0c in FY16.
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