Investors have become besotted with growth stories, any growth story, no matter if it's in resources, industrials, retailing: you name it, if the story is great and consistent, the herd follows.
Take JB Hi-Fi, the hot retailing stock of 2007.
The shares have run mad, jumping another 69 odd cents to yet another all time high yesterday of $16.89 after the annual meeting in Melbourne was told that trading conditions were going well.
"Current trading has continued to be strong, in line with that experienced in the second half of last financial year.
"Comparative store sales continue to be double digit and we are confident about trading going into the Christmas and New Year period.
"December remains a key trading period given the increasing skew of our product mix to gift related categories and will be the major determinant as to whether the momentum in the early part of the year is reflected in the 2008 full year result.
"Continued economic growth and near full employment are expected to underpin consumer confidence and expenditure going forward. We do not expect the election to have any effect on consumer confidence with commentators suggesting an equal economic stimulus under either party.
"We have been pleased with the performance of our recently opened stores and are confident that they will contribute strongly to earnings over the coming years as they mature. The property pipeline remains solid with about five additional stores to be opened in the second half of 07/08.
"The 20 stores to open this year will be the biggest number of new stores that the company has opened in any year, which will help ensure its continued strong growth. We expect sales in FY08 of circa $1.billion or a 33% increase."
When the 2007 earnings were released on August 14, at the start of the credit freeze and big correction, JB Hi- Fi's shares tumbled, hitting a short term low of just over $10.
This is what the company said then "Sales for FY08 to date have continued the strong momentum experienced going into the end of the 2007 financial year, with consolidated comparable store growth for the first 6 weeks of trading being 23.4%.
"We do not expect this comparable stores sales figure to be as high going forward, as we have had unusually strong trading conditions and we will cycle stronger past year sales in the fewer categories of games and computers.
"We expect sales in FY08 of circa $1.7 billion or a 33% increase."
Notice no mention of earnings and no change on the sales forecast from August and yesterday's statement.
The only difference is that the firm trading conditions shown in the explosive second half growth in 2008 were continuing but that 33% rate of growth for the year with "sales of $1.7 billion" estimated for the 12 months was repeated unchanged.
And the market chased the shares all day, despite a half a per cent slide on fears the resources were a bit overdone.
Harvey Norman first quarter sales figures are due out today and the retail sales for September will be out tomorrow. Both will show that JB Hi-Fi is doing well, but the growth story is basically unaltered from three months ago.
It's not only consumers who are gadget-smitten, investors are as well.
The falling cost of imports of consumer products, like home entertainment, IT products and other stuff is being driven by the rising value of the dollar, but JB Hi-Fi (and HVN) have to move the stuff as quickly as possible because the falling dollar price means they could be caught with more costly goods bought at more expensive dollar levels.
Adding to the pressures to move the stuff are price falls as new products replace older models.
Obsolesce can cost slow retailers a lot in lost sales momentum and earnings from stock losses.
Chairman, Pat Elliott, told the meeting that much of the retailer's success is due to its capacity to satisfy Australians' endless appetite for new technology. Plasma and LCD televisions, MP3 players and DVD recorders continue to be hot ticket items for the retailer.
"The company continues to shift its product mix to be an early leader in new technologies promising high growth and significant volume," Mr Elliott said.
In August the retailer posted a net profit of $40.39 million for 2006/07 – up 56.5% on the previous year. That result was on $1.28 billion of sales, up 35% increase on the previous year.
