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Gold/Mining/Energy : Hudson's Bay Company (HBC.tse) -- Ignore unavailable to you. Want to Upgrade?

To: Apex who wrote (2)	2/16/2000 11:24:00 PM
From: Apex	Read Replies (1) \| Respond to of 22

Old news, but good news: ============== nationalpost.com Friday, February 04, 2000 Price is right among retailers' stocks Zena Olijnyk Financial Post Canadian merchandising stocks were not the place to invest in 1999, says Marilyn Brophy, an analyst with Scotia Capital Markets. The sector suffered its worst performance in nearly 30 years. Still, there are some bright spots for those wanting to buy shares of retailers in 2000, Ms. Brophy says in a recent report. These include Canadian Tire Corp., Empire Group (which owns grocer Sobeys Inc.), Sears Canada Inc. and Hudson's Bay Co. The sector underperformed in 1999, she says, despite consolidation in the supermarket and department store industries, buoyant consumer spending and attractive stock valuations. Ms. Brophy says the trend has continued into the new year, with the Toronto Stock Exchange merchandising subindex declining more than 9% compared with the year-ago period. That contrasts with the TSE 300's gain of less than 1% in the period. Ms. Brophy says the merchandising stocks she follows are trading at an average of 16 times forecast earnings for this fiscal year. That's a 43% discount to the corresponding multiple for the TSE 300. Her 12-month target for the merchandising subindex is 5344, about a 15% upside from current levels. Scotia Capital's target for the TSE 300 is 9000, a gain over today's levels of around 8895. A situation has developed, she says, whereby the gap between the winners and losers continues to widen. But Ms. Brophy has a number of "strong buy" and "buy" recommendations for retailing stocks, with total expected returns of between 26% and 71%. In the non-food merchandising stocks, Sears Canada and Forzani Group "continue to post sustained earnings gains" while the performance of other retailers, such as Dylex Ltd., Mark's Work Wearhouse and Boutiques San Francisco "continues to be erratic." Forzani (FGL/TSE), Canada's largest sporting goods retailer, is estimated to earn 59¢ a share for the fiscal year just ended and 75¢ for fiscal 2000. Her one-year target for the stock is $6.40. Forzani closed down 5¢ at $4.20 yesterday. She expects Sears' earnings to rise to $2.40 this year from $1.88 last year, while her 12-month target price is $51 a share. Sears (SCC/TSE) closed yesterday down 75¢ at $39.25. Ms. Brophy says Hudson's Bay (HBC/TSE) is likely to report healthy fourth-quarter earnings for the year just ended, helped by one of the strongest Christmas seasons in years. The shares, which closed at $13.45 yesterday, off 45¢, are trading at a price-sales ratio whereby an investor "can hypothetically purchase one dollar of revenue for about 14¢ a share." At these levels, rumours of a potential takeover will likely resurface, she says. Last summer, talk of a takeover sent the stock soaring over $20. There has since been speculation that the company might separate its Bay and Zellers units, spinning one or the other off. Ms. Brophy's one-year target price is $25 a share, with the retailer expected to earn $1.04 a share for the year just ended and $1.63 for this fiscal year. The share price increase represents a return of 71% over current levels. Canadian Tire (CTRa/TSE) closed yesterday at $26.60, down 25¢. Ms. Brophy says one reason for this is that there has been a large amount of index selling as a result of the collapse of the TIP 35 and HIP 100 into the new S&P/TSE 60. There has also been some concern surrounding the recent announcement Stephen Bachand, chief executive, will retire this year. Ms. Brophy estimates earnings of $2.65 this year, up from $1.89 -- which included a $50-million specialc charge -- it earned for the year just ended. Her price target is $39. Sobeys (SBY/TSE) is expected to reap the benefits of its acquisition of the Oshawa Group Inc., as well as savings from upgrades to its distribution system in Ontario. Two new food distribution centres are expected to generate savings of $20 million, while the Oshawa takeover will lead to $70-million. Ms. Brophy also notes that Sobeys will be added to the TSE 300 in mid February. Her target for Sobeys stock is $26. It closed yesterday at $18.80, up 30¢. Sobeys parent company, Empire Co., is trading at more than a 30% discount to its estimated pretax "realizable" value of $43 a share. Her 12-month target is $35. Empire is in the midst of selling its investment in U.S. grocer Hannaford Bros. Co. for $79 (US) a share in a cash and stock transaction. When the sale is completed, Empire will own 10% of Delhaize. As a result of the Hannaford sale, Empire's pretax value rose to more than $46 a share. Empire shares (EMPa/TSE) closed yesterday at $28, up 50¢.