In today’s daily we have covered stock research on The Reject Shop. To view 4 Growth + Dividend Stocks to buy click here

S&P 500 was up by 10.49 points or 0.56% to 1878.21 on Wednesday. U.S. stocks mostly rose on Wednesday as the Federal Reserve signaled it will continue to support the economy, but the Nasdaq fell for a second session on weakness in Internet names. Fed chair Janet Yellen also cited weakness in the housing market and geopolitical risks as reasons for the U.S. central bank to remain accommodative, a policy that has enticed investors into taking in more risk.

Technology companies in the S&P 500 lost 0.2 percent on Wednesday after tumbling 1.2 percent on Tuesday. Yahoo! Inc. dropped 6.6 percent. Alibaba Group filed for what could become the largest U.S. IPO ever. Yahoo plans to sell part of its 22.6 percent stake in the Chinese online marketplace. Groupon Inc. lost 21 percent as its sales and profit projections for the current quarter trailed some estimates. Twitter sank 3.7 percent after leading a selloff in Internet shares yesterday with an 18 percent tumble.


S&P 500 Daily Chart   (Source – Thomson Reuters)
 
S&P ASX 200was down by 45.6 points or 0.83% on Wednesday and closed at 5435.8 points. Metcash has acquired Midas Australia from its parent Company TBC Corp, to expand its automotive parts and services business. Glencore Xstrata is cutting back on coking coal production and focusing more on thermal coal.

Junior Copper explorer Stavely Minerals has made a debut on the ASX at 21 Cents for a share. Aurizon Holdings announced ownership interest of UBS AG representing 5.05% of the total voting power. The Victorian government is preparing for the $5 Billion Privatization of Port of Melbourne with Investment Banks expected to make pitches soon for the advisory roles. World oil prices have surged higher after crude inventories unexpectedly fell from a record high in the US, suggesting better demand in the world's largest crude consumer.


S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 




Stock of the Day – Reject Shop (TRS)
 
The Reject Shop (TRS) is Australia’s largest and most profitable discount variety retailer. The company targets value conscious consumers with an average price of $3.00 per item across its 7000+ range of everyday and home ware goods. TRS currently has over 300 stores and plans for a potential network of 500+ stores as it develops a new small format store.

The outlook for broader retailing in Australia appears to be improving with the strengthening of consumer confidence. However the continued resurgence of Kmart has created some industry headwinds in the discount variety market. TRS Managing Director, Chris Bryce has announced his resignation and will leave the company around 30 June 2014. We believe that TRS’s store rollout program could come to an end in coming months with the new management likely to change company focus from store rollout to network optimization.




Source - TRS

The Reject Shop has a reasonable strong brand and has recently managed to secure a number of store locations from its failed competitor, Retail Adventures. The continued deterioration in profitability per store has raised question marks over the company aspiration for 500+ stores. With new management to be appointed in coming months we expect the targeted store network to be dramatically scaled back.


TRS Daily Chart  (Source - Thomson Reuters)
 
There is a risk that during the vacuum of leadership at TRS, the company becomes a takeover target. However we believe this risk is low given the likelihood of restructuring required. While the TRS’s share price has underperformed in recent months, we believe the end of company’s store rollout is far closer than some think. We believe the stock is overvalued at its current price and would review the stock at a later date.

---

Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.
Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).
The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.
Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.
The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide.