Today in Shortlisted, we’d like to do a little bit of gloating and remind you of Paul Rickard’s call last week for Wesfarmers over Woolworths, on the day that WOW hit a peak at $38.51 and then plunged. It’s now trading at around $36.60. Check out the share price below.
Paul’s exact words were: “Now a market darling, my sense is that Woolworths is starting to look expensive – around these prices, look to take some profits.”
Another small cap that Peter likes, after hearing Richard Hemming from Under the Radar talk about it on Switzer TV during the week, is honey company Capilano, with the very cute ASX code CZZ.
Capilano was started as a co-op in 1953 by two brothers.
“This is a great story about all the beekeepers banding together,” Hemming says.
Managing director, Ben McKee, is a fifth generation beekeeper and the company has “beekeeping in its bones”, according to Hemming. It is now looking at expanding its export side and servicing the Chinese market. “They have focussed not on wholesaling product, or selling it in bulk, but on retailing it and buying some speciality brands where it’s like five times the price,” Hemming says.
“So they have got quite a high value added product.”
Supply constraints have stopped them so far with only 7,000 tonnes of honey produced this year, compared to the 12,000 tonnes needed to service the Australian market. However they already have capacity for 40,000 tonnes, which means they are well placed to service the growing Chinese export market.
“We really should be looking at food companies like this,” Peter says.
Another company on our shortlist this week is Resmed. UBS head of Australian Equities, Jakov Males, likes it. He likes its sound balance sheet with plenty of cash and its position in the industry. At Switzer, Peter and Paul both believe that stocks like Resmed will do well when the currency falls.
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