Friday, 9 May 2014

Shoprite hiding away it's potential

Shoprite has been hiding in the shadows for the last 2 years, as share prices have been in a steady bear trend. From the above technical analysis, it is clearly seen, that a falling wedge is formed and with an break through the resistance line it will then signal for the bull trend to continue.

The question still remains when that will be?

Investors still have confidence within the share, as noted in the above, that a clear support level has formed around 14000c. Major institutions aren't running for the hills, with the dividend yield holding strong at 1.74%.

How can a dividend yield increase to a higher %?

  1. The company (Shoprite) has to pay out a larger dividend, or
  2. The  share price needs to decrease considerably.
 Shoprite share price has already decreased by 34% which in turn raised the dividend yield to just over 2%. Shoprite reported a 7.3% increase in dividend (interim results for the 6-month period ending December 2013).

Total Liabilities increased with 12.6% since the previous reporting period.
Total Assets increased with 15.1 % since the previous reporting period.

Shoprite still has a lot of growth potential.

A company continuing to expand into Africa and opening up more stores can only lead to better earnings.

I still value this stock at 25000c a share.

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