3 reasons it might be time to SELL Woolworths Limited

Woolworths Limited (ASX: WOW) shares have fallen almost 44% in two years.

Source: Google Finance

Source: Google Finance

But despite falling from over $37 to just $21 per share, and underperforming the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) by 37%, it could get worse before it gets better.

3 reasons it might be time to sell Woolworths

  1. Home Improvement

Sure, Home Improvement wasn’t well executed. But it took Bunnings Warehouse, owned by Wesfarmers Ltd (ASX: WES), decades to get to where it is today. Without Home Improvement, Woolworths is left with few growth opportunities over the long-term.

  1. Grocery

Woolworths is the largest Australian grocery business by sales, but it has its back up against the wall. With Aldi and Coles, also owned by Wesfarmers, breathing down its neck, the days of Woolworths’ supermarkets being among the most profitable in the world appear over.

  1. Valuation

Though Woolworths shares have fallen, the recent news flow and trading updates provided by the company haven’t been reassuring. Together with the recent dividend cuts, there’s a case to be made that shares aren’t cheap, meaning shares could fall further if the company cannot deliver some upbeat results in the near future.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned in this article. You can follow Owen on Twitter @ASXinvest.

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.

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