Scentre Group (ASX: SCG) has been one of the biggest beneficiaries from the latest string of good news surrounding potential COVID-19 vaccines.
Shares are up around 40% since the start of the month, however, future uncertainty around retail continues to weigh on the Scentre share price.
SCG share price chart
Scentre Group operates shopping centres under the Westfield brand in Australia and New Zealand. Not to be confused with Unibail-Rodamco-Westfield (ASX: URW), which operates the same Westfield branding in the US, UK and Europe.
Is the Scentre share price a buy today?
I probably wouldn’t be a long-term holder of Scentre shares, as I think there are a few macro factors that could present some challenges.
Keep in mind that even prior to COVID-19, Scentre has struggled to significantly grow its earnings on a per-share basis. To invest for the long-term would be to expect a full recovery and then even more growth on top of that.
That said, I can partially see the appeal in capturing some potential upside back to Scentre’s pre-COVID levels as we see foot traffic and occupancy levels pick up to where they were. I think the important thing to think about is how long is this likely to take? And is my money better off somewhere else that could generate a higher return in that time?
Some have pointed out that Scentre’s shares have been trading at a significant discount to the company’s net tangible assets (NTA). While this form of value investing does have its merits, I think the market has valued Scentre shares at a discount for a reason. I wouldn’t be so sure that the market will eventually re-rate the Scentre share price back in line with its NTA.
1 ASX retail share I prefer
If I held Scentre shares right now, I’d probably hold onto them for a bit longer, but I also wouldn’t be a buyer at these levels. COVID-19 has accelerated the shift to online, so if I wanted exposure to retail, I’d probably pick a company that’s complemented by a strong online platform.
One ASX retail share I’m particularly liking at the moment is Accent Group Ltd (ASX: AX1). It’s a footwear retailer with a popular range of brands including Hype DC, Vans, and Timberlands.
Accent Group has achieved compound earnings per share (EPS) growth of 12.3%, and an annualised return to shareholders of 20.4% over the past 10 years.
It has plans to continually roll out new stores and I back management in being able to continue to grow the business. If you’d like to know more, click here to read my in-depth analysis of Accent Group shares.
