Don’t say Mr. Market never gave you anything. Shares of Metcash (ASX: MTS) have fallen harder than the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) in recent months, declining 14% over the last 90 days versus a 5% decline in the index over the same period.
Today, Metcash shares are trading for a shade under 22 times earnings and on an EV to EBITDA basis of 8. Potential investors should also take a look at the impressive dividend yield, currently in the 7.8% range, fully franked.
Metcash operates both distribution and retail businesses. It represents Australia’s third supermarket chain, IGA, coming in behind Woolworths (ASX: WOW) and Coles, owned by Wesfarmers (ASX: WES), and also operates liquor stores such as Bottle-O and Cellarbrations.
Most recently, Metcash moved deeper into the hardware and automotive space, with a Metcash subsidiary acquiring the assets of operations of Australian Truck and Auto Parts Group in May.
“The automotive aftermarket parts retail sector is a large market worth $5.6 billion. The acquisition will provide potential for growth within Metcash’s hardware and automotive pillar,” said Metcash CEO Andrew Reitzer in a press release.
The bottom line for investors
Metcash could be one for your watch list as a business of reasonable quality and one that pays out a generous dividend to shareholders. A tick or two down, and the share price could become attractive.
In the market for high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!
- Three small cap stocks with huge dividend yields
- Which bank is the best investment?
- Does Telstra still have the best dividend?
- Join the Chorus with this Kiwi value play
Motley Fool contributor Catherine Baab-Muguira owns no shares in any company mentioned in this article.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th