AzzumahI find it quite funny how i always contradict your...

Azzumah

I find it quite funny how i always contradict your opinions on various stocks.

IMHO, WOW is now one of the most dangerous stocks to hold.

It's trading on a PE way above 20x. It's recent strong earnings growth was primarily a result of the acquisition of approx 70 Franklins stores for a pittance. The earnings from these stores are now almost full factored into earnings... which means that future earnings growth will have to come from organic store sales growth, which has historically run at approx 5%.

A number of competitors (Aldi, Action, and Franklins) have started up over the last 12 months that will INEVITABLY chip away at Wollies market share, and also increase the likelyhood of pricing pressure.

The facts are that Wollies are currently GROSSLY overvalued.

I think fair value lies in the $8/9 range.

The downside FAR OUT WEIGHS the upside.

This is a clear SELL in my books.


* Only my opinion *



PS. Hope you didn't buy CSL.