In episode 136 of Magic Markets, we kicked off the discussion by talking about retail stocks. They are always relevant to investors because people know the brands and feel like they understand the businesses. Of course, like everything in the market, it’s not quite that simple.
In this action-packed discussion that touched on many different topics, we talked about:
- Difficult conditions in South Africa and how they have separated the strong from the weak in the sector, specifically touching on how grocery retail isn’t as defensive as people think it is.
- Separating consumer discretionary from consumer staples, especially in a market like the US where there are so many listed companies, with a discussion on recent relative performance of these sectors.
- Costco vs. Walmart vs. Loblaws vs. Target in terms of year-to-date performance.
- Why it is important to remember that most US-listed retailers have global exposure, certainly to a greater extent than South African listed players.
- The Walmart – Flipkart deal.
- The Liberty Two Degrees take-private and what investors can learn from that experience and the recent numbers.
- How do retailers optimise for eCommerce and what impact does this have on companies like Amazon or Prologis in the real estate market?
- The concerning recent trend in shrinkage in the US market.
- Cashbuild and its exposure to the worst of South African challenges, with Ellies as an example of a company that should be taking advantage and isn’t.
- The split of the Takealot business and the competitive onslaught that it faces from Amazon, with a comment on omnichannel retail as a safer bet and MercadoLibre as an example of how pure-play online can be successful.
There’s a lot in here, yet we covered all these topics in just over 20 minutes. Give your market knowledge a boost with Magic Markets and reap the rewards in your portfolio.
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