Is Myer Holdings Ltd at bargain prices?

With all the media attention on David Jones Limited (ASX: DJS) from the takeover offer, Myer Holdings Ltd (ASX: MYR) may seem a little jilted. Over the past six months Myer shares are down about 23% compared to an approximate 5% rise in the S&P ASX 200 Index (ASX: ^XJO), so the market is not hot on the company either. So what does Myer have to look forward to and could this weakness be an opportune time for investors?

–  Warm weather and mid-year clearance sales

The above average warm weather is disrupting winter goods sales so much so that Myer announced it will postpone its mid-year clearance sales. Just before the financial year end, these sales are very important to second-half revenue. If colder temperatures do finally come, then sales could be salvaged. If not, then heavy discounting will be necessary to clear stock.

–   Lower consumer sentiment

Consumer sentiment has slipped recently and retail trade figures for April show flat growth in the trend estimate. Signs of a recovery in sales around Christmas are slipping now.

–   High dividend yield

Myer Holdings stock is offering a 7.5% dividend yield, so investors seeking yield may be attracted. However, if full year results show weaker earnings, the final dividend could be affected.

–   Solomon Lew and David Jones

A late development involving Solomon Lew, the chairman of Premier Investments Limited (ASX: PMV), buying a stake in David Jones is stirring up news, with talk the investment may be to block Woolworths Holdings’ takeover offer of David Jones. Evidently Myer investors have a lot to think about, especially if the possibility of a merger with David Jones comes back on the agenda.

A grossed-up yield of 7%... plus double-digit profit growth!

You don't have to wait for Myer Holdings to improve to have a winning stock in your portfolio. The Motley Fool's top dividend stock for 2014 offers growing sales, accelerating profits and a grossed up dividend yield of 7%!

NEWLY UPDATED. Find out the name and code right now -- your copy of "The Motley Fool's Top Dividend Stock for 2014" is FREE. Simply click here!

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.