Hennes & Mauritz - Q2! (BUY - 183)

The picture below shows you where the stock price is traded at relative to its valuation during the 08' crisis*.


I've been monitoring Hennes & Mauritz B (HM-B) - a Swedish clothing retailer, which I am sure your aware of.

Its stock has been declining the last 3 years years due to missed earnings expectations as they are transitioning themselves to sell more via e-commerce. It has solid fundamentals, and I feel that it is currently undervalued, and that the market is too rigidly pricing its valuation, last quarterly earnings it fell over 25%.

Insider trading in the stock during its decline has increased, with key holders in the Stefan Persson family increasing their holdings as seen via the insider registry from the Swedish Financial Authority.

Basically they've been buying it steadily at bargains, in proverbial terms - buying the dips. Its current value is at 126 SEK, which is a price at last traded at during the financial crisis bottom.

Given the current macroeconomic environment and state of the global economy including key sectors HM operates in, I have to repeat my previous assumption, that the price of the stock is severely undervalued.

I believe that a single positive quarter can increase its share price by over 25%, and if one multiplies a couple of quarters consecutively then it is not unreasonable to see that its share price returns to at least 183 SEK (which is where it traded during the earnings release of Q4 in January, see the picture as a reference).