Woolworths the Ultimate Defensive

Woolworths the Ultimate Defensive


Back in July 2016, Woolworths was getting crucified by the media for its now doomed entry into the hardware sector.  Masters was clearly a disaster however the market lost sight of the existing supermarket and liquor business that forms the foundation of the company.  The stock was clearly oversold and investors that backed my recommendation (BUY around $21.00) are now sitting on a profit of around 38% including dividends and franking.

In my view Woolworths is back to becoming one of the Australian Stock Exchange’s premier defensive stocks and the company now possess similarities to that of a utility. It would be close to impossible to replicate the portfolio of supermarkets and liquor stores that Woolworths have built in high density population areas all around the country.  So regardless of what happens in global markets we all still need to eat and drink.

The company is back making around $1.5 billion per annum in profits and paying a healthy fully franked dividend.   I continue to recommend buying and holding this high quality stock with a management team focused on operating the best supermarket business in Australia.

Whilst it isn’t cheap, cheap, cheap like 2016 it is still at a nice everyday price!


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