With shares sitting at $11.26, shopping centre operator Westfield Group (ASX: WDC) presents itself as an attractive core addition to your portfolio.
An excellent prospect
As one of Australia's largest corporations by market capitalisation, the company has given shareholders consistent returns over the last 12 months – aided in part by daily share buybacks – but has fallen by 10% since mid-May. This has given investors an attractive entry point to potential growth opportunities and a 4.5% dividend yield.
There is a lot to like about Westfield. Operating 100 stores spread across four countries, the company has its priorities right. The effects of the global financial crisis lead Westfield and its subsidiary Westfield Retail Trust (ASX: WRT) to strengthen its portfolio through strategic divestments and expansions of its most profitable assets. Furthermore, with a long-term goal of greater global expansion, the company maintains excellent growth potential.
The risks
Of course, the industry certainly holds its risks. Whilst the company relies heavily upon consumer and business confidence for revenue, the expansion of internet retail is something that needs to be monitored. With specialty retailers such as JB Hi-Fi (ASX: JBH), Harvey Norman (ASX: HVN) and Myer (ASX: MYR) adjusting their business models and returning to profitability, however, it seems that brick and mortar retail still has plenty of life left in it.
Meanwhile, competition also poses as a risk to Westfield's expansion prospects. Property development groups Stockland (ASX: SGP) and GPT Group (ASX: GPT) are also focused on expansion and strengthening their portfolios. As such, Westfield investors should watch that its market share is not being taken by other companies. With a strong management team leading the company however, it looks more likely that market share will be gained rather than lost.
Foolish takeaway
The GFC and expansion in internet retail saw Westfield's value fall significantly between 2007 and 2011 as investors lost their faith in the company's future prospects. Now, it seems that investors are beginning to regain that faith. With shares dropping back over the last month, now could be an excellent opportunity to add this company to your shopping list.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
