The best JSE Top 40 listed food retail shares in August 2022
In this article we take a look at JSE listed food retail companies: Pick n Pay, Shoprite, Spar and Woolworths in terms of total returns, peer valuations as well as broker ratings and price targets
In this article we take a look at JSE Top 40 listed food retailers: Pick n Pay, Shoprite, Spar and Woolworths in terms of total returns, peer valuations as well as broker ratings and price targets.
JSE Food & Drug Retail Index – Technical view
The above chart of the JSE Food & Drug Retail Index highlights that the long term trend for this sector is up. After a brief correction into July, we see the index is now moving to test all time highs.
As a broad gauge for its underlying constituents, the index suggests the sector to be overbought whilst in this longer term uptrend. This suggests that traders might favour long positions into near term pullbacks rather than trying to short the tops of this sector.
Total returns
| Security | Total Return: 1 Month | Total Return: 3 Month | Total Return: Year to Date |
|---|---|---|---|
Pick n Pay |
8.00 |
19.15 |
22.28 |
Shoprite |
10.72 |
12.87 |
13.83 |
Spar |
13.46 |
6.35 |
-5.15 |
Woolworths |
-2.45 |
-0.88 |
3.52 |
The above table highlights the total returns over a 1 month, 3 month and year to date look back period for major JSE food retailers. The total returns figures include both capital gains and dividend returns.
For the year to date, Pick n Pay has led sector gains followed by Shoprite and then Woolworths. The Spar Group is the only of the four companies to have produced a negative return for investors in 2022.
We have however seen a sharp rebound in Spar over the last month, where it is leading gains. Woolworths is the only counter covered to have produced a negative return over the last month.
Peer valuations
| RIC | Company Name | Trailing P/E LTM | Forward P/E FY1 | Dividend Yield Latest (%) |
|---|---|---|---|---|
SHPJ.J |
Shoprite Holdings Ltd |
24.91 |
20.84 |
2.49 |
PIKJ.J |
Pick n Pay Stores Ltd |
24.54 |
18.81 |
3.57 |
SPPJ.J |
SPAR Group Ltd |
13.54 |
12.33 |
4.54 |
WHLJ.J |
Woolworths Holdings Ltd |
16.95 |
14.29 |
2.77 |
Peer Average |
19.97 |
16.57 |
3.34 |
|
In terms of a basic fundamental view, Shoprite and Pick n Pay seem priced for growth as they trade at relatively high price to earnings (P/E) multiples on both a historical and forward looking basis. The Spar group trades at the most conservative P/E relative to its peers. The Spar Group has the highest dividend yield.
Broker ratings and long term price targets
| Security | Analyst Recommendation | No. of Analysts | Price Close | Price Target | Discount/Premium |
|---|---|---|---|---|---|
Pick n Pay |
BUY |
7 |
62.00 |
68.00 |
-8.82 |
Shoprite |
HOLD |
7 |
235.50 |
248.29 |
-5.15 |
Spar |
BUY |
5 |
156.53 |
183.80 |
-14.84 |
Woolworths |
BUY |
5 |
52.92 |
62.30 |
-15.06 |
How to trade food retail stocks in South Africa
If you want to trade any of the JSE listed food retail stocks we have discussed today, you can utilise our CFD trading platform to speculate on the share price movements of the underlying asset – to buy (long) or sell (short) following these simple steps:
- Create an IG Trading Account or log in to your existing account
- Enter the company name or ticker in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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