The retail sector is always an interesting sector to analyse. Reason for this is that it is a proxy for the health of the consumer. I have taken two shares to illustrate how investors have bought the defensive retailers and avoided or sold the more cyclical retailers.

Shoprite has maintained its uptrend while Woolies has not been so lucky. Woolies has come under pressure from a weak consumer that led to earnings disappointments and a lower share price.

The chart below shows the share price of Woolies. This counter is still in a down trend so I would suggest adopting a wait-and-see approach. When the chart becomes more constructive and makes higher lows it will be the time to buy.

The share looks cheap if you consider the historic PE is 13.54 and the one year forward PE is 12.82. The shares is also currently on a dividend yield of 5.5%. If you consider the PE of Shoprite it is currently 17.81 one year forward.

Next time

We take a look at food producers and what shares to look at in that growing sector.
 
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