In this section we provide readers with three stocks that have attracted the interest of the broking community or the ‘herd’. Broker recommendations tend to be biased and highly optimistic. We try and breakdown these barriers and give our own honest opinion. It is important to keep in mind that technical analysis is only one part of the investment process and any recommendations do not give consideration to the underlying fundamentals of each business.       JB Hi-Fi (JBH) – Current Price – $28.30 – JB you’ve done it again. The electronics retail sector is smashing expectations as pre-Christmas jitters have now turned to an expectation of better than expected interim results. Amazon who? Looks like Amazon fears were well overdone. This led Morgan Stanley’s consumer team to slap an Overweight recommendation on the stock on the expectation of solid trading and upside to earnings post-interim results.  It seems an aggressive defence against Amazon seems to have paid off for JBH. Shares are trading at an 11 month high at $28.30. Broker View:  Morgan Stanley (EQUAL-WEIGHT $25.00) – The broker has upgraded its recommendation on the back of a better retail outlook. Upside risks to our price target include: Better-than-expected sales growth. Rational industry pricing. Category innovation accelerates. Success from online and/or Home and Capital management. Downside risks include – A deterioration in Australian consumer spending. Worse-than-expected LFL sales growth. Abnormal level of discounting leading to gross margin deterioration. Unconventional View: We agree with Morgans Stanley. We last wrote about JBH back in February last year (click here) when the stock was trading around $28.15. Pretty much the same price it is now. We were overly impressed with their profit result following the Good Guys acquisition. Since then the stock was hit by the whole Amazon brouhaha.  In fact every stock in the retail space was hit. Shares in JBH dropped to June low of $21.50. But since then, they’ve climbed all the way back. That’s a 30% come back. So what’s caused it? JBH launched an aggressive campaign to defend its turf against the US behemoth Amazon. And it appears to have paid off. Amazon’s Australian launch on December 4 appears to have had a very limited impact. We lifted this from Lifehacker.com.au – Below is Deutsche Bank’s list of ‘soft launch’ prices comparing similar products from JBH and Amazon. As you can see JBH prices smash Amazon. We’re unsure if this is sustainable or whether it’s temporary. Either way it boosted sales and instilled confidence in shareholders. To be honest, we in-fact weren’t too confident of JBH pulling through. We thought Amazon’s online retail store would cause a massive shift in consumer behaviour. But it didn’t. Visiting JBH Chadstone during Christmas trading time was an utter nightmare. The shop was packed like a sardine with a line going out the door. Nothing has changed. JBH is back. We were wrong. The electronics retailer continues to expand and record solid sales growth year after year. It has its own style and it sticks to what it does best… it sell electronics cheaper than anyone else. But put the numbers aside, if you really want to see how JBH is doing, walk into a store and do a litmus test. Have a look inside a JBH store. What you’ll see is a packed out store with numerous shoppers snapping up bargains every minute or at least they think they are. You’ll also get top notch customer service from the JBH sales gurus. It’s also had an open and accepting environment, relaxed atmosphere focused on making customers feel comfortable and happy. They’ve mastered the art of retailing and are leagues above Harvey Norman or Myer. To add to this JBH has just…

This article is for members only

To read this article - sign up for a FREE 14 day trial NOW

Blurred Text