Targeting Scentre
Recommendation
Good things come to those who wait. We were hoping for an opportunity to upgrade Scentre Group when we wrote Price slashed at Scentre back in October, but by the time we published the article its price had crept back above our $4 Buy price and there it has stayed – until this week.
The higher bond yields that precipitated this week's sharemarket falls affect the value of all stocks, because they increase opportunity costs (ie the money you can make elsewhere). This is most obvious with high-yielding stocks like Scentre, where investors can easily compare yields, without much growth (or contraction) to confuse the picture. However, we're already allowing some margin of safety for higher rates in our $4 Buy price – which represents an (unfranked) distribution yield of 5.7% – and we're happy to stick with it. BUY.