The newly formed Westfield Corp (ASX: WFD) now manages Westfield's international shopping centre assets in the United States and Europe with plans to develop plenty more shopping centres in the world's major cities.
It hit the ASX boards over a month ago now and after hitting a high of $7.64 in late July has taken a breather amidst a general market sell off to be trading for $7.25 today. This may be an opportunity for smart investors to buy a business on a reasonable valuation with great growth potential. Here are five reasons why.
Quality management is absolutely critical to any company's performance and with the Lowy family remaining in charge investors can rest easy their money's in a business primed to succeed.
It's built for the future with a vision is to build and operate iconic shopping centres in major cities at the heart of the global economy. The advent of online shopping means its shopping centres have evolved to attract foot traffic, which is why Westfield offers food, leisure and entertainment to keep the visitors rolling in time and again.
A huge development pipeline will deliver growth for patient investors with a long-term focus. It has about $11.8 billion invested in current and future developments including Westfield World Trade Centre, New York, Westfield Milan and Westfield shopping centres in London and California's Silicon Valley.
Dividends are attractive thanks to Westfield's defensive revenue streams and as they are paid in US cents a future depreciation in the value of the Australian dollar will provide a free boost to today's investors. The payout for FY 2014 is forecast at US24.6 cents which puts it on an FX-adjusted yield around 3.8%.
The valuation is reasonable for what now looks like a more growth-oriented business. The Lowy family have perhaps recognised that the real growth opportunities are outside a saturated domestic shopping centre market and at $7.35 Westfield trades on 17.2 times Morningstar's estimates for 2014's earnings. Current prices are also a long way below Morningstar's fair value estimate of $8.
In my opinion Westfield Corp looks one of the best buys available on the ASX right now, while investors may also want to consider the operator of Westfield's Australasian assets Scentre Group (ASX: SCG). Alternatively if you're looking for fully franked dividends why not consider a business with growing brand power and a huge 7% grossed up yield. This business is small now, but has growing brand power, director ownership and potential to be a cracking growth story. Its worth finding out about this one before it reports its full year results. If you're interested just enter your email, by clicking here now.
