Episode Summary
With a potential US-Iran deal hanging over markets, Simon Brown tours the JSE’s beaten-down consumer sector β food and clothing retailers β asking whether the sell-off has created genuine value or just cheap-looking traps. Eight stocks get the treatment, from the blue-chip safety of Shoprite to the near-bankruptcy speculation of Pick n Pay.
What We Cover ποΈ
- π Iran peace talks and what a $2/barrel Hormuz transit fee would mean for inflation
- π Food retailers: Shoprite*, Boxer, Pick n Pay, SPAR β ranked by conviction
- π Clothing retailers: Pepkor, Foschini Group*, Mr. Price*, Lewis*, Woolworths
- π Valuations stock by stock: forward PEs, price-to-book, dividend yields, analyst targets
- π¦ Shyft Web Trader: offshore CFD and equity trading now live inside the Shift app
- π Upcoming events: Power Hour (22 April) and One Invest global equities event (12 May)
Key Takeaways π‘
- Shoprite is the best business in SA retail β forward PE of 17.3x against a 10-year average of 21x puts it below one standard deviation. Not dirt cheap, but quality at a reasonable price.
- Pick n Pay is priced for bankruptcy β the market values it below the worth of its Boxer stake plus cash. If it doesn’t go bust (not a certainty), there’s a meaningful asymmetric trade here. Purely speculative, but not as binary as the price implies.
- Lewis looks genuinely cheap β dividend yield of 9.85%, PE around 5β6x, and price-to-book of 0.9x. The risk is an extended Iran conflict driving inflation and hurting its credit-dependent customer base.
- Mr. Price’s Eastern Europe expansion has been priced at zero β the market hated the announcement, but “zero” is probably wrong. Forward PE of 10x against a 17.3x average is compelling if you can tolerate the uncertainty.
- SPAR is back at 2011 price levels β 15 years of gains erased. For recovery-story investors, Pick n Pay offers a cleaner moat (its Boxer stake); SPAR’s path is murkier.
- Pepkor is best-positioned in clothing β Flash, Brazil, and banking ambitions give it multiple growth levers. Trading at just 1.3x book. The one Simon doesn’t hold, but likes.
Stocks & Markets Mentioned π
- SHP* β Shoprite β SA food retail leader; forward PE 17.3x, 10yr avg 21x; R275; SBG: buy
- BOX β Boxer β ShopRite spin-off discount grocer; forward PE 20.7x; R73; SBG: hold
- PIK β Pick n Pay β distressed; trading below value of Boxer stake + cash; ~R19; speculative
- SPP β SPAR β back at 2011 levels; forward PE 14x; R61; analyst avg target R107; 6 holds, 2 buys
- PPH β Pepkor (Pep/Ackermans/Flash) β forward PE ~15x historic; price-to-book 1.3x; R22.80; SBG: buy
- TFG* β Foschini Group β forward PE 8.8x vs mean 14.5x; div yield 5%+; R70; SBG: buy
- MRP* β Mr. Price β Eastern Europe expansion priced at zero; forward PE 10x vs avg 17.3x; div yield 5.9%; R155; SBG: hold
- LEW* β Lewis β div yield 9.85%; PE ~5β6x; price-to-book 0.9x; R85; no SBG rating
- WHL β Woolworths β new CEO (food background); forward PE 13.3x vs mean 20.1x; R50; avg target R61.51
- CMH* β Combined Motor Holdings β Tuesday trading update; EPS over R5; PE ~7x; Simon holds
Listen & Subscribe – links below π§
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WorldWide Markets Podcast
Wednesdays are all about hard-core investing and trading with Simon Brownβs WorldWide Markets podcast (previously JSE Direct). JSE Direct started life on ClassicFM in July 2008 and became a podcast in 2011. Every week Simon shares his views on the state of global economies, individual shares and events moving markets.
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