● Entry point: Potential entry between R64.78 and R65, where the stock is consolidating near support at R62.
● Stop loss: Place a stop loss at R60, reflecting a maximum downside risk of ~7.5% from entry.
● Take profit: Target set at R 76.11, representing ~17.50% increase.
● Aggressive store expansion driving growth: The retailer is aggressively expanding its store footprint, planning to double its presence in 6 - 7 years by adding 60 - 70 stores annually, with a strategic focus on underserved rural and township markets. The company has already grown from 489 stores in 2024 to 525, supported by a new distribution center in KwaZulu-Natal that enhances logistics efficiency, while its Boxer Rewards Club, with 1.9 million members, strengthens customer retention and enables data-driven sales strategies.
● Defensive business model: The model strategically targets lower to middle-income consumers, a strong demographic that continues spending during economic downturns. Its focus on fixed wireless services and grocery essentials generates stable cash flows that help manage cyclical risks and ensure consistent revenue streams.
● Strong financial performance and high ROE: The company has demonstrated strong financial performance with revenue growing 13.2% year-over-year to R 42.3 billion in the 2025 financial year. It also saw a 14.3% increase in gross profit, while its good 71% return on equity, which is significantly higher than the industry average of 23%, reflects highly efficient capital reinvestment.
The share price has found strong support at the R62 level, establishing a solid base for potential upward movement. The Bollinger Bands have contracted significantly, indicating reduced volatility and typically preceding a decisive breakout. Most notably, the MACD indicator has completed a bullish crossover above the signal line, suggesting positive momentum that favours upside potential.
These technical signals collectively point to: 1) A confirmed support zone at R62, 2) an imminent volatility expansion (likely upward) as the Bollinger Bands squeeze resolves, and 3) strengthening bullish momentum as evidenced by the MACD (moving average convergence divergence) crossover. This confluence of technical factors suggests favourable conditions for potential entry with clearly defined risk parameters.
RISKS
● Consumer Spending Slowdown: Economic pressures may reduce discretionary spending.
● Execution Risk: Rapid expansion could strain operational efficiency.
● Competition: Rivals like Shoprite and Spar are also targeting discount divisions.
Disclaimer:
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** This article was prepared by BROKSTOCK analyst Maboko Seabi
