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!)

Portfolio Analyst, River Capital Growth Fund, River Capital

Vishal Hargovan

Portfolio Analyst, River Capital Growth Fund

River Capital

Equity Bottom-Up

With an improving outlook and a solid turnaround strategy, The Reject Shop currently offers an attractive entry point with a 37% margin of safety. Strong operating cash flow as a result of an improved working capital position and a much more muted store expansion plan going forward give us more confidence in the new management team. What gives us comfort is management are demonstrating focus on the return maximization of the existing store footprint (rather than continuing the previous aggressive roll out) through operational efficiencies and productivity improvements.&nbsp;

With an improving outlook and a solid turnaround strategy, The Reject Shop currently offers an attractive entry point with a 37% margin of safety.  Strong operating cash flow as a result of an improved working capital position and a much more muted store expansion plan going forward give us more confidence in the new management team.  What gives us comfort is management are demonstrating focus on the return maximization of the existing store footprint (rather than continuing the previous aggressive roll out) through operational efficiencies and productivity improvements.&nbsp;  

Things I liked about the Reject Shop 1H15 Result (TRS AU)

Australia

The Reject Shop Limited operates discount retail stores in Victoria, New South Wales, South Australia and the ACT.  The Company's discount stores offers a variety of merchandise such as apparel, houseware, leisure, personal care and hardware and furniture.

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Reject Shop (TRS 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

Things I liked about the Reject Shop 1H15 Result (TRS AU)

With an improving outlook and a solid turnaround strategy, The Reject Shop currently offers an attractive entry point with a 37% margin of safety....

Vishal Hargovan

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)