Markets lower ahead of US CPI data release

Analyst thesis 

Our recommendation is based on:

• Cost advantage: NextEra Energy’s leading scale in wind and solar generation and capital-efficient development model provides structural cost leadership, strong operating leverage, and high free-cash-flow visibility. Its long-standing utility footprint and renewable expertise create durable competitive barriers. 
• Resilient earnings driven by contracted cash flows: A large portion of earnings is supported by regulated utility operations and long-term power purchase agreements. This stable earnings base, combined with diversified renewable assets, delivers predictable margins and consistent cash generation across cycles. 
• Expansion into high-growth renewable segments within North America: NextEra continues to scale wind, solar, and energy storage platforms, capturing growth from data centres, industrial customers, and grid modernisation. A roughly 30-gigawatt backlog broadens its addressable market and extends the long-term growth runway. 
• Room for long-term gains: The company’s visible cash flows, supportive policy tailwinds from IRA incentives, global decarbonisation trends, and potential lower interest rates indicate potential upside relative to its current valuation.

Analyst thesis 

Our recommendation is based on:

• Valuations are subdued from an EV/EBITDA and P:E perspective.
• SHP’s low value proposition, in keeping pricing inflation lower than general food and non-alcoholic inflation, positions it to continue with its momentum to gain market share.
• Checkers Sixty60 continues to dominate the grocery delivery space albeit growing competition (Woolies Dash, Pick n Pay ASAP!, Zulzi, etc). 
• It’s a stable growing business with a hold across LSM bands from its Shoprite & Usave formats to Checkers and Checkers Hyper stores. 
• SHP is well-positioned to benefit further as consumers experience easing pressure from stabilising inflation and SARB interest rate cuts.

Analyst thesis

Our recommendation is based on: 

• Valuations are elevated from a P:E and EV:EBIT perspective.
• The watch segment, contributing 15% of revenue, faces growth headwinds as seen in slowing Swiss watch exports.
• Growth regions such as Japan are normalising from previous highs (after cheaper Yen saw a spike in tourist spend), and Asia Pacific growth remains dampened (as China’s economic conditions have negatively impacted demand).
• Cost pressure (especially rising precious metal and material costs) could further place pressure on profit margins.