This week, CMC Markets’ Michael McCarthy likes The Reject Shop (TRS). “TRS has a market capitalisation at around $64 million, and expects to make around $10 million profit this year from its 338 stores. That’s a downgrade from previous estimates closer to $18 million, and clearly some previous shareholders have panicked,” Michael says.
“Shares are trading around $2.20, down from highs above $8 this year. I’m currently looking for bricks and mortar retailers with a differentiated strategy, trading at share prices that I regard as good value. TRS fits the bill,” he concludes.
Chart 1: The Reject Shop
And our own Paul Rickard likes Rio for the off-market buyback. This closes at 5.00pm (WST) this Friday. Low rate taxpayers, such as an SMSF in pension or in accumulation mode, will be accepting the buyback – and many will look to buy the shares back on the ASX. It is a tax transaction – some will want to maintain their exposure to the company – and this will provide short-term support to the share price. If you are not sure whether you should accept or not, see Paul’s article at: https://switzersuperreport.com.au/rios-buyback-is-a-no-brainer-for-some-shareholders/
Chart 2: Rio Tinto
Michael doesn’t like AMP. “I still don’t like it. The company has unhappy shareholders, declining funds under management and an uncertain future.
“In my view, the idea that Macquarie Group will bid for AMP is, to use a technical term, nuts. I suggest that the better investment understanding of this company is to look at break-up values,” Michael says.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.