Buy Hold Sell: 5 small-cap retailers

Buy Hold Sell

Livewire Markets

The market applied the blowtorch indiscriminately across the retail sector last year, creating long-absent pockets of value in the market. Shrewd investors moved in, but are opportunities still present today? In this week’s Buy Hold Sell, we pit two small cap specialists called Chris against each other to find out.

Tune in as Matthew Kidman of Centennial funds hosts Chris Prunty of QVG Capital and Chris Stott of Wilson Asset Management. Chris Prunty says of one company: “We love the stock. It’s a rare beast; a network effect company that can grow rapidly”. Chris Stott warns of one retailer, ‘there have been three insider sales in six months, we’ve never seen that before’. Watch below to get the full story.


Key points 

  • (KGN) is up more than five-fold this financial year, giving it a cap close to a billion dollars and a PE of 51. There have been three inside sells in three months, something you don’t often see. Caveat emptor?
  • Afterpay (APT) is a ‘rare beast’ on the market: a network-effect company that can grow rapidly. Customers and retailers universally love it. Expect significant momentum to show in the numbers over the next few years. 
  • Reject shop (TRS) is on a reasonable PE of just 11, and there is some traction showing at last. However, the business is mature and is sensitive to changes in same-store sales.
  • Noni B (NBL). Management has a good track-record as turnaround specialists. The company has balance sheet capacity to execute further acquisitions, and for now, the stock is on a PE of just 8.5.
  • Nick Scali (NCK). The company opened 10 stores on a 46-store base. While analysts are concerned at the dampening of the metrics that this causes, this sets the stock up for a good FY’19. Stock is still on a trailing dividend yield of 5%.

Watch next

5 stocks in the hottest sector right now: (VIEW LINK)

4 small cap infrastructure stocks: (VIEW LINK)

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Buy Hold Sell

Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.

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