In today’s daily we have covered stock research on Harvey Norman (Expensive).

To listen to our latest podcast onG8 Education click here

To view our recent recommendation on NEXTDC Click Here

To view our recent recommendation on Strike Energy Click Here

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.
  

---

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.