AB Foods Share Price (ABF)

Not sure I have any 'words of wisdom' but I'll comment.

If you think a share is going to go, a downswing in price is good, you can buy cheap. I jumped in a little too soon, but I think in the long run I'm going to be happy anyway.

So, what's holding it down? Well, first, it was overpriced for what it IS. There's premium built into the price based on what people think it will, or might, be. If Primark goes big in America, it will be extremely valuable. So maybe some sentiment is now less positive about that. Even at today's SP, the price to earnings ratio is still at 17, and divi around 2%, hardly attention grabbing, especially with UK shares perhaps undervalued generally. I wouldn't touch it if I didn't see significant potential for growth here. I didn't buy for what it is but for what I anticipate it to be.

So, it's a growth stock. I suspect general market sentiment over Brexit and recession fears is hurting growth stocks more than others. I think that's a factor.

I also am sure like-for-like sales at Primark being down is not helping. You can only open so many stores, and once you hit that limit if like-for-like sales stay down, then revenue will drop. I'm not persuaded they will stay down.

I think another factor is concern about whether Primark will be as successful in America as here. Walmart has some cheap clothes. The American clothing market already has some inexpensive options. Is it really going to work phenomenally, or will it be good but not great, or will it flop? I don't think it will flop but no one really knows.

The pound's weakness may not be helping that much either. I suspect ABF imports more than it exports, so a low pound hurts. If that's the case, part of the price may be due to no-deal Brexit pessimism and the anticipated hit on the pound. It's anyone's guess what happens with Brexit, of course. I'm expecting no-deal, and expecting it to affect the pound but not disastrously, but within a year or two to see a recovery.

My opinion only, which may not be worth anything -- I'd say if you aren't prepared to ignore the share price for 1-3 years it may not be the investment for you. Likewise, if your risk tolerance is low. I think there's significant upside but I'm not in very heavily here, because I do see some risk that the upside never materialises. I don't think the downside is as high as a lot of 'growth' companies, either. They'll keep producing food and it's one thing people have to keep buying. So I doubt you'd lose a lot of your money, but if the upside doesn't come, you might lose a little bit of it, and you might have lost the opportunity to buy something better.

For me, the risk is worth it. In fact, I think I'm likely to wish I'd bought more. But that will be hindsight.

The word around ABF seems good, with Primark forging ahead on profits and sales, and a positive Trading statement 4/7/19 confirming US business and activities remain positive. Any loss from Sugar is supposedly factored into the 1H19 results and better performance is forecast 2H19 / FY. Hargreaves Lansdowne shows as Very Strong Broker Buy and many have revised their target to a range of 2900-3400p. So, with all this positivity, why the poor share price and why is it enduring continuous slides. It could dip below 2300p in next few days (appreciate that it has recently gone ExD). Does the 2.1 Divi Yield put investors off, or is their some worry that Primark, the Jewel in the Crown, may be broken out of the ABF share price and be a stand alone share? As someone keen to add ABF to my small portfolio, the price slide against the positives confuses me. Any words of wisdom?

https://www.standard.co.uk/business/primark-beats-high-street-slump-and-steps-up-its-us-invasion-a4182311.html

I've seen this for some time as a nice hedge against Brexit. If we do get a no-deal Brexit, and if it does turn out to be damaging (I'm not persuaded it will happen or be that damaging if it does), I think ABF is likely to do relatively well anyway.

Better than expected. I'm in this for the long term but nice to see it do reasonably well short term, too.

Odd. I was responding to a question about how much profit the cannabis operations was generating. That question has disappeared....