PGR is the most undervalued listed stock I can find. Obviously there are reasons stocks trade at what is 'normally' understood to be true value. The stock market is just like real world human nuances, what is trendy today, selling baby milk formula to the Chinese...well not so trendy now it seems.
The obvious reasons PGR trades at an intrinsically are not really scrutinised by the market but when you do they just don't stack up as follows.
The poor performance since IPO:
This is historical and influenced by market sentiment at the time and every market participant knows that historical performance is no guide for future performance - it is written repeatedly in investment risk documents - but humans are emotional animals, not necessarily logical in thought process.
Illiquid Shares:
This is only relevant to big investors, it is actually irrelevant to the majority who reside in the HC forum. In reality it should not matter to larger investors either as value is value - but you see this is one of those human things of following what the crowd says is conventional. When sentiment changes the shortfall of freely treaded shares provides more upside - this works both ways.
Diversity:
There is a wrong market perception PGR is not diversified, just in apparel. PGR is probably one of the most diversified (risk mitigation) apparel retailers on the ASX. It is diversified at all levels from shop retail, wholesale, online, geographically, customers from infant to older demographic, male/female, swimwear, formal wear, informal, sport, footwear, active wear, own brand, brand management, design independence and I have probably missed a few.
Metallicus:
The poor performance of this brand re-enforces the negative sentiment. A diversified company will from time to time dump parts of the business that are not profitable as they should, most brands in apparel have a finite life - this is a sign of good, not bad management.
Finances:
Due to all of the above the company cash flow and balance sheet doesn't get looked at. This should be first port of call when looking to invest not the last. A strong balance sheet and cash flow does not guarantee anything but means they have at least a better chance than the highly geared competitor.
Management:
PGR has strong management with a history in the industry, they don't make panicked and rash trendy decisions or double down with shareholders money like the SRF casino- yet the likes of SRF was all the rage a year ago by so called sophisticated investors - the point of this post!
Declaration: the musings of a top 20 shareholder.
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