Peet Serfontein & Jalpa Bhoolia.
Woolworths Holdings Limited is a South African-based retail group. In South Africa, the group trades through Woolworths, a respected chain of retail stores offering discerning customers a selected range of quality clothing, food, homeware, beauty, and financial services under its own brand name. Woolworths also owns Country Road Ltd, a leading Australian clothing and homeware retailer.
Technically, a share that appears to be in an incomplete inclining channel pattern makes for an attractive investment opportunity (see the black parallel trendlines on the main chart).
The patterns occurs when the price moves within upward sloping parallel lines, indicating that bullish sentiment has not yet fully developed. If the price does not significantly break below the lower trendline, it is considered an incomplete pattern and can signal continued buyer interest and potential for further upside movement - a bullish outlook.
The insert shows the linear regression channel analysis for the share over the last 200 weeks. When the price touches the lower one standard deviation range of an upward sloping linear regression channel, it often signals a bullish trend. This area typically acts as a support level, indicating that market participants might regard the share as undervalued. As a price approaches this lower boundary, it can trigger buying interest, thus leading to a rebound. This pattern suggests that investors are confident in the share's upward trajectory and are using these lower points as buying opportunities.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R83.00, which classifies our profit target of R78.00 as realistic.
We suggest a low capital at-risk allocation to this trade. Increase exposure for a break above R70.
Share Information
| Share Code | WHL |
|---|---|
| Industry | Consumer Discretionary |
| Market Capital (ZAR) | 66.86 billion |
| One Year Total Return | -10.54% |
| Return Year-to-Date | -6.34% |
| Current Price (ZAR) | 67.62 |
| 52 Week High (ZAR) | 81.13 |
| 52 Week Low (ZAR) | 58.24 |
| Financial Year End | June |
| The current share price provides a good entry point. Technical indicators are supportive of further upside. The share price remains just below its 200-day simple moving average of ~R70.00. Expect moderate volatility in the share price. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 4.17 | 4.36 | 4.83 | 5.36 |
| Growth (%) | 4.68 | 10.78 | 10.87 | |
| Dividend Per Share (ZAR) | 3.13 | 3.13 | 3.47 | 3.84 |
| Growth (%) | - | 10.80 | 10.75 | |
| Forward PE (times) | 15.51 | 14.00 | 12.63 | |
| Forward Dividend Yield (%) | 4.63 | 5.13 | 5.68 | |
| The earnings growth outlook is decent, with the dividend yield expected to be fairly stable. | ||||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position | RDF - BUY (Continue to hold) |
MRP - BUY (Continue to hold) |
APN - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 3.78 | 157.50 | 182.66 |
| Current | 4.12 | 170.20 | 195.01 |
| Movement | 9% | 8.1% | 6.8% |
|
A strategic investment opportunity. Continues to stay above its 200-day simple moving average. Fading upside momentum is concerning.
Our take profit target remains at R4.50 with a trailing stop-loss level at R3.85. Exit the trade on 4 March 2024. |
A price coinciding with a trough in the business cycle remains of interest. Fading upside momentum is concerning. Trading above its 200-day simple moving average.
Our take profit target remains at R213 with a trailing stop-loss level at R147.50. Exit the trade on 7 April 2024. |
A developing symmetrical triangle pattern remains of interest. Trades above its 200-day simple moving average. Fading upside price momentum continues to be a concern.
Our profit target is R222, with a trailing stop-loss at R171 Exit the trade on 27 December 2024. |
| Share Name and position | BTI - BUY (Continue to hold) |
SNT - BUY (Continue to hold) |
OUT - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 562.87 | 296.56 | 42.50 |
| Current | 574.75 | 302.00 | 42.31 |
| Movement | 3.6% | 1.8% | -0.4% |
|
A price that is testing the lower range of an inclining channel pattern remains of interest. Upside price momentum is supportive. Close to testing its 200-day simple moving average.
Our take profit target remains at R645 with a trailing stop-loss level at R559. Exit the trade on 22 April 2024. |
An incomplete cup and saucer pattern remains of interest. Upside price momentum is a highlight. Remains above its 200-day simple moving average.
Our take profit target remains at R337 with a trailing stop-loss level at R286. Exit the trade on 29 April 2024. |
A consistent uptrend is attractive. Fading downside price momentum is a positive point. The share remains just above its 200-day simple moving average.
Our take profit target remains at R50 with a trailing stop-loss level at R39.70. Exit the trade on 6 May 2024. |
