the recency effect - an investor's best friend, page-16

Great discussion here folks and useful analysis Camden.
I think there is a very real risk of Woolworths being a value trap. It has been said on this post that WOW has high barriers of entry. Well besides Costco's entry in to Australia you also have to consider Aldi's advance (ever notice how crazy their shops are on a Thursday?), the rapid improvement in Coles sales growth and lastly Metcash are no fools either in retail. Really from a position of coles and woolies having an 80% market share there is only one way to go. This I think has flushed out a bit of deperation to now go into hardware. Will their hubris be their undoing? time will tell. If you drill down into Woolies results, rate growth has been slowing for the last three years and little wonder with the size they have become, Australia is a small market when all is said and done, so it may not be cyclical it may be structural. A very real concern with retail in Australia is price deflation, in that if goods sell for 10% less with discounting you'll need to sell 11% more just to have the same sales, however profit margins will be less, so to therefore will be profits. Also Australians as a whole are de-leveraging and I expect this to take several years, so I plan to be the patient investor for a while longer with woolies. Were it to be $26 in three years then it would likely be a better value proposition.