Hello holders, been wanting to post on this one for a while....

Hello holders, been wanting to post on this one for a while. I've taken a small position before results are announced. Fairly expensive P/E but if the growth is there and I certainly believe it is with the store rollout then this should perform very strongly in a low interest rate environment. What I particularly love about this business is their supply chain and the fact that their goods are so cheap that it doesn't really compete with online businesses as much as the traditional retailers do. I believe their niche market is the lower income earners and I always see them flocking around these stores.

Also a recommendation from Ben Grffiths from Eley Griffiths Group (Courtesy of Eureka)

Discount retail chain, The Reject Shop (TRS), bounced back from adversity in early 2011, when its recently commissioned distribution centre in Toowoomba, Queensland was inundated during the Brisbane floods, threatening the group’s east coast operations. We quit our holding at the time of the floods, fearing systemic disruptions to the business’s supply chain and ultimately earnings. Nine months later when it appeared that they were back in stride, we returned to the register.

The Reject Shop has a very clear growth strategy before it and thankfully has a mercurial management team to ensure it is executed well. The group finished financial year 2013 with close to 274 stores and continues to target a long-term network of 400 stores.

The near-demise of competitor, Retail Adventures, is setting up an extraordinary opportunity to accelerate new geographies on favourable terms whilst removing an irrational competitor in the process. Remember, businesses are only as good as the industry they keep, and the structure of discount variety retailing is on the improve!

Behind the scenes, management are actively looking to fine tune their product sourcing and logistics practices, principally in their dealings with Asian suppliers. The impact on margins could be significant here.

Priced on a ‘fuller-side-of fair’ value PE of 16.6x PE for 2013-14, the market is prepared to pay up for future growth. I am more than happy to stay with our position.


Read more at Eureka Report: http://www.eurekareport.com.au/article/2013/8/14/small-caps/seven-small-cap-fund-manager-picks#ixzz2bzaf3tFt