Value Investor: Harvey Norman's heady heights

For this retailer's share price, a consumer recovery and exposure to the building cycle is more than priced in.

In the past year the stock of Harvey Norman Holdings Ltd. has significantly outperformed the market, rallying over 50 per cent and outperforming the All Ordinaries which is up 15 per cent over the same period. Investor appetite has been driven by modest gains in consumer spending, the retailer's leverage to the housing completions cycle, a marginal recovery in sales and expectations of further gains. Trading 50 per cent above our valuation and 30 per cent above the consensus mean valuation for fiscal 2014, we argue a consumer recovery and exposure to the building cycle is more than priced in.

Graph for Figure: Harvey Norman Holdings Limited Price vs. Value Chart

Source: www.StocksInValue.com.au

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