JB Hi-Fi Bets $44 Million on Retail: What this means for the share price

JB Hi-Fi Share Price - ASX JBH

Dear Reader,

JB Hi-Fi Limited [ASX:JBH] just invested $44 million into a warehouse. Aren’t we supposed to be in a a retail apocalypse?

This warehouse is located in the Melbourne suburub of Truganina.

Point being: the company is investing!

With the current share price up over 80% since this time last year…is now the time to be buying?

Today, we’ll take a look.

Let’s get to it…

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Who is JB Hi-Fi Limited [ASX:JBH]?

As you may know, JB Hi-Fi is a retailer of consumer electronics. They have a big yellow and black logo.

I can only assume you’ve shopped there many times already.

What you may not know is that this group is in charge of two of Australia’s best-known retailers.

That’s JB Hi-Fi and The Good Guys.

The group combined have over 300 stores across the country and New Zealand. Plus a big presence online.

And in preparation for an expanding sector…JB Hi-Fi has spent $44 million to expand facilities in Victoria.

This is a pretty hefty investment for the $4.5 billion-dollar company.

The seven-year lease will give them 18,023 square meters of office and warehouse space.

And it’s a ballsy bet given that many retailers are starting to shrink…or go bust.

Recently, we’ve seen Harris Scarfe, David Jones, EB Games and also Jeanswest scale back and focus on profitable locations only.

Will investing now  pay off for JB HiFi? Only time will tell.

Investors are betting that it will.

I’ll show you what I mean shortly…but before I close up here keep in mind that JB Hi-Fi will report 10 February.

So about that chart.

Take a look at it below…

Up-up and away?

Port Phillip Publishing

Source: Trading View

[Click to open in a new window]

What you’re looking at above is the monthly chart of JB Hi-Fi.

This is the 30,000 view of the chart and will give you a long-term perspective.

It may be fair to say that right now investors are expecting positive news this month.

After all, they’re moving the company’s share price to a new all-time high.

What you should be aware of though, is that buying right before an announcement is risky.

If at any point the announcement fails to please investors, you could see the price fall just as fast as it rose.

It always pays to wait until the announcement has been made. And if your rules still permit you to enter, then to follow them.

After all, there’s nothing worse than buying at the top.

We’ll wait and see what JB Hi-Fi has to report next week.

For now, this is best placed on the watchlist.

As always, this is not a recommendation to buy or sell JBH. It is an update only. I hope you found it useful.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch

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