In today’s daily we have covered stock research on
Harvey Norman (Expensive).
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The
S&P 500 was down 8.15points or0.41%on Thursday. U.S. stocks dropped on Thursday as concerns about the financial health of Portugal's top listed bank gave investors a reason to cash in recent gains. Among the day's gainers was
TRW Automotive Holdings Corp up 8.2 percent at $98.91 after Bloomberg reported that the auto parts supplier had received a preliminary takeover proposal and was in the process of evaluating it. The stock hit an all-time high of $101.75 earlier. Shares in high dividend yielding companies such as
Verizon Communications advanced as U.S treasuries gained.
At the heart of the matter was
Banco Espirito Santo, Portugal’s largest listed bank by assets. It’s shares were suspended from trading after sliding more than 17%. Lisbon’s PSI 20 stock index extended Wednesday’s 2% drop by a further 4.2%, leaving at its lowest level since October.
Gold climbed $9 or 0.7% to $1,335 an ounce a level not seen since March.

Gold Daily Chart (Source – Thomson Reuters)
S&P ASX 200was up by 11.9points or0.22%on Thursday and closed at 5464.4 points.
ROC has advised that it has received a second proposal in relation to the acquisition of all the issued share capital of ROC. ROC has notified
Horizon Oil of the approach.
My Net Fone has announced that it has gone into an agreement to purchase the business of wholesale telecommunications enabler
iBoss.
Atlas Iron has shipped a record 3.1Mt in the June 2014 Quarter to beat its full year production guidance. Invigor Group has established a new development centre in India.
Fairfax Media has announced the acquisition of Canberra based property portal of All Homes.
Finbar has announced the final dividend of 6 cents fully franked and also it forecasts a record profit of $36 million for FY14. Among the top movers on the market were Karoon Gas and Navitas Limited.

Karoon Gas Daily Chart (Source – Thomson Reuters)
The
top gainers on ASX 200 were:-
Stock of the Day – Harvey Norman (HVN)
Harvey Norman increased like for like sales from its core Australian operations by 3.6% for the three months ended 31
St March. We expect growth to slow in the fourth quarter of fiscal 2014 reflecting recent declines in consumer confidence. We expect sales data to remain weak while operating costs increase at a faster rate and dilute future returns. Over the longer term we expect competition for branded products will increase as consumers are drawn to value and the convenience of shopping online.

HVN Geographical Spread (Source – Company Reports)
We also expect the larger retailers such as Wesfarmers and Woolworths will move into selling a range of electrical and household goods through their hardware branded stores. We expect price to become an increasingly key differentiator in determining where consumers transact. Those retail companies which can deliver to the consumer at the lowest cost, either through a low cost online business or through cost advantage achieved through scale will take the market share over time.

HVN customer Interaction (Source – Company Reports)
The internet has empowered consumers to review and research product information and easily compare prices from around the world. Harvey Norman lacks scale compared with large competitors and operates under a relatively high cost structure, supporting a large national store portfolio. The structural change to the retail industry, combined with cyclicality of discretionary expenditure, is a reason why there is high uncertainty associated with the stock.

HVN Daily Chart (Source – Thomson Reuters)
The recent profit downgrades across the retail sector have been attributable to the unseasonable warm winter weather leading to excess apparel inventory. We expect warm weather will lead to lower sales of heaters and electrical blankets but this loss to have been mitigated by an increase in flat screen TV sales in the lead up to FIFA world cup. Over the long term we view the convergence of technology into a single smartphone device will lead to a greater commoditization of technology. We believe the stock is expensive at its current price and would review the stock at a later date.
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