There are far to many 'value' investors looking at this stock with their eyes firmly placed on the rear view mirror.
DJS is still an avoid in my opinion at current prices. My reasons are as follows:
(a) In the retail sector management is the critical key between success and substandard performance. Think about it, unlike say Coles/Safeway, shoppers don't have to shop at DJS. There are plenty of substitutional players. What does DJS have that is unique? Does DJS have a number of brands that are solely available in DJS? The short answer is no. Therefore management is key to creating a strategy that entices customers into a DJS store. Under the old CEO this was successful. But the old CEO is no longer there.
(b) Notice the difference in commentary between MYR and DJS. MYR is predicting a turnaround in the second half. DJS is predicting another 20% drop in profit in the second half (lfl). One is turning around, the other is still seeing cockroaches on the floor.
(c) Yes DJS owns its two major CBD buildings in Melbourne and Sydney which increases its NTA. However NTA is around $1.44, this still still a far cry from the current share price of $2.45. Harvey norman also has huge property holdings yet its share price is much closer to NTA. Therefore the share price can still deflate much further based on just a NTA to share price basis.
I will be watching the share price with much interest once this stock goes ex-dividend. My prediction is it will fall harder than the dividend amount as the shorters will significantly increase their short interest once they don't have to worry about the dividend.
DJS Price at posting:
$2.43 Sentiment: None Disclosure: Not Held
