Six months ago I wrote about HOME (Home Retail) and DEB (Debenhams).
The story was that DEB had good price momentum, whilst HOME had poor momentum.HOME sunk on its trading update, whilst DEB gained. I said at the time that HOME looked value-trappy.
I had anticipated that HOME would continue to decline, whilst DEB would continue to improve. I was wrong, however. Here are their charts for the last 6 months:
As you can see, HOME improved over the last 6 months, outperforming the index (FT100) by 56%, whilst DEB declined, under-performing it by 7%.
HOME’s shareprice has been helped by the takeover offer from SBRY (Sainsbury), so it would be difficult to know how things would have panned out without this exceptional event. Having said that, HOME’s cash pile made it more attractive as a bid target.
Momentum can reverse.
HOME 171p . DEB 79p. ASX 3426
Mark Carter's blog 