Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

Macroeconomics

In a blog post last year, I wrote of the lost decade for discretionary retailers; expected profitability was little changed from ten years earlier.&nbsp;A number of structural and cyclical headwinds continued to adversely impact the sector, including the persistently strong Australian dollar, consumer caution associated with the financial crisis and increased competition from e-tailers.&nbsp;In this post, I argue that signs of a less cautious consumer are emerging.&nbsp;There is downside risk to the household saving ratio as households become more optimistic about the future, durable goods spending continues to recover and consumer sentiment should benefit from the positive reaction to the Federal Budget.&nbsp;Against this backdrop, I recommend investors neutralise their under-weight bets in discretionary retailers, with a view to moving overweight as more signs of a less cautious consumer emerge.&nbsp;Getting the sector call right is more important than stock selection, but we highlight stocks that offer the strongest upside, including Echo, GUD, Harvey Norman, Premier Investment and Super Retail.

In a blog post last year, I wrote of the lost decade for discretionary retailers; expected profitability was little changed from ten years earlier.&nbsp;A number of structural and cyclical headwinds continued to adversely impact the sector, including the persistently strong Australian dollar, consumer caution associated with the financial crisis and increased competition from e-tailers.&nbsp;In this post, I argue that signs of a less cautious consumer are emerging.&nbsp;There is downside risk to the household saving ratio as households become more optimistic about the future, durable goods spending continues to recover and consumer sentiment should benefit from the positive reaction to the Federal Budget.&nbsp;Against this backdrop, I recommend investors neutralise their under-weight bets in discretionary retailers, with a view to moving overweight as more signs of a less cautious consumer emerge.&nbsp;Getting the sector call right is more important than stock selection, but we highlight stocks that offer the strongest upside, including Echo, GUD, Harvey Norman, Premier Investment and Super Retail.

A less cautious consumer: Good news for discretionary retailers (finally!)

Thematic (Sector/Industry)

The RBA confounded market expectations by leaving the overnight cash rate unchanged at 2.25% at yesterday&rsquo;s Board meeting. But many will interpret the RBA's adoption of an explicit easing bias as a harbinger for further out-performance of high yielding stocks. On closer inspection, I show that high yielders have endured a period of under-performance in recent years. Both valuation theory and price patterns suggest that investors perceive high yielders to be riskier than low yielders. Consequently, the under-performance of high yielders reflects the fact that investors have eschewed risk from their portfolios. For investors seeking to invest in high yielding stocks with strong price momentum outside of the banks, utilities and REITs,&nbsp;only three&nbsp;candidates meet these criteria at present: CCL, IFL and JBH.

The RBA confounded market expectations by leaving the overnight cash rate unchanged at 2.25% at yesterday&rsquo;s Board meeting. But many will interpret the RBA's adoption of an explicit easing bias as a harbinger for further out-performance of high yielding stocks. On closer inspection, I show that high yielders have endured a period of under-performance in recent years. Both valuation theory and price patterns suggest that investors perceive high yielders to be riskier than low yielders. Consequently, the under-performance of high yielders reflects the fact that investors have eschewed risk from their portfolios. For investors seeking to invest in high yielding stocks with strong price momentum outside of the banks, utilities and REITs,&nbsp;only three&nbsp;candidates meet these criteria at present: CCL, IFL and JBH.

The yield trade and the RBA's easing bias: More than meets the eye

Australia

JB Hi-Fi Limited is a music and electronic goods retailer in Australia.  The Company operates stores at sites located in most Australian States.  Products include consumer electronics, car sound systems, music and DVDs.

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JB Hi-Fi Ltd (JBH AU)

A less cautious consumer: Good news for discretionary retailers (finally!)

In a blog post last year, I wrote of the lost decade for discretionary retailers; expected profitability was little changed from ten years...

Sam Ferraro

The yield trade and the RBA's easing bias: More than meets the eye

The RBA confounded market expectations by leaving the overnight cash rate unchanged at 2.25% at yesterday’s Board meeting. But many will interpret...

Sam Ferraro

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)