Down 4.1% and 4.6%, respectively, Australia’s largest supermarket operator and the third largest bank have each been caught up in a vicious global sharemarket selloff.
National Australia Bank shares are down a whopping 11.8% in a single month. Having climbed to a high of $34.82 earlier this month, the leading $81 billion business bank has been unable to avoid the market’s wrath despite recently posting a respectable third-quarter trading update.
Meanwhile, the market is eagerly awaiting the latest report from Woolworths – due later this week – following a strong profit update from rival Wesfarmers Ltd (ASX: WES) last week. Indeed, despite operating our country’s largest supermarket network and providing non-discretionary goods to many millions of Australians every week, the market took a scalpel to 4.1% of the company’s shares today.
Is it time to buy in?
I’ve previously noted that my fair value estimate for Woolworths shares is between $27 to $28. However, while they may appear cheap at a current price of $25.29, before I buy more shares I’m waiting to see how the group reports this week – I suggest you do the same.
As for National Australia Bank Ltd shares, I’ve also pegged fair value around $28. However, that figure did not include the bank’s recent record-breaking capital raising or APRA’s changes to risk-weights on investor loans. At $29.71, NAB shares would have to drop to around $20 (so to ensure a healthy margin of safety) before I’d get excited about buying shares.
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Motley Fool contributor Owen Raskiewicz owns shares of Woolworths Limited.
The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.