Rami Levi, Israel’s third-largest supermarket operator by revenue, gained the most in a week on bets double-digit sales growth at the discounter is drawing the attention of foreign investors.
Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. has posted revenue increases of more than 20 percent in eight of the past 10 quarters. Shares gained 1.7 percent, the most since May 27, to 176.5 shekels at the close in Tel Aviv, stemming a three-day decline. The benchmark TA-25 Index rose 0.4 percent.
Jerusalem-based Rami Levi has seen FMR LLC and MSD European Opportunity Fund LP, part of MSD Capital Ltd., increase stakes in the company as sales exceed those of Shufersal Ltd., whose revenues rose 6.3 percent in the first quarter. Rami Levi has rallied 39 percent this year and is trading at 19 times estimated earnings, according to data compiled by Bloomberg. That compares with 32 times for Istanbul-based discount store operator BIM Birlesik Magazalar.
“The sentiment around Rami Levi continues to be positive because there are foreign investors that are coming into the stock,” Meir Slater, an analyst at DS Securities & Investments in Tel Aviv, said today by phone. “They see growth and a solid sector.” Slater rates the shares as outperform, according to data compiled by Bloomberg.
The company said on April 14 that Boston, Massachusetts-based investment manager FMR raised its stake, buying 12,000 shares at a price of 168.16 shekels ($45.53). On March 28, Rami Levi said MSD European Opportunity Fund LP, part of MSD Capital LP, acquired shares in the company, bringing its stake to 6.18 percent.
Started in 1976 from a stall in the Jerusalem’s Mahane Yehuda market, Rami Levi plans to increase the number of stores to 50 by the end of 2015 from 26, according to an investor presentation in March.
“The scope of the expansion will also elicit a more aggressive push back from the competition,” Gil Dattner, analyst at Leumi Capital Markets in Tel Aviv, wrote in a note to investors today. The Leumi analyst increased the price target on the shares to 163 shekels from 158 shekels. He reiterated his market perform rating on the stock.
Alon Blue Square, Israel’s largest retailer by revenue, declined 2.4 percent to 13.37 shekels. Shufersal, the country’s number-two operator, traded 0.6 percent lower to 13.31 shekels.