A better investment than Wesfarmers?

Despite being 24% owned by former parent company Wesfarmers (ASX: WES), and counting the conglomerate's hardware chain as its major …

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite being 24% owned by former parent company Wesfarmers (ASX: WES), and counting the conglomerate's hardware chain as its major tenant, BWP Trust (ASX: BWP) may be more in control of its results than some skeptics admit.

For instance, as The Australian reported yesterday, "BWP Trust has been able to reap rental increases that general manager Grant Gernhoefer concedes have raised pulses at the conglomerate", including most recently a 31% rise to a $1.2 million annual rent for Bunnings' Geraldton location.

Another source of growth for BWP — beyond rent increases — is likely to come from acquisitions, with manager Gernhoefer said to have his eye on additional Bunnings stores. He's not ruling out Masters stores, owned by rival Woolworths (ASX: WOW), either. The possible acquisitions, which could total as much as $200 to $300 million for a portfolio of stores, will be funded through capital raising, Gernhoefer seemed to indicate.

XJO, WOW, WES, BWPAs the chart shows, BWP has outperformed not only the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO), but also Wesfarmers and Woolworths over the last five years. Past performance is no indication of future returns, but BWP remains an intriguing investment idea.

For starters, BWP offers a way to play the burgeoning DIY culture and the continued rise of the hardware store chain Down Under. It also offers some exposure to the gradual recovery of the construction and homebuilding sectors, following the severe GFC lows. Earlier this week, news broke that new home build approvals rose faster than expected in February, by some 3%, or nearly 13% on a year-over-year basis.

With BWP units trading for around 14 times earnings, and with the units paying a yield of about 6%, Mr. Market seems to be offering a more than fair deal to potential investors.

Like BWP Trust, two of Australia's most promising small companies are still flying under the radar. Discover these two exciting ASX investments in our brand-new special FREE report, "2 Small Cap Superstars". Click here now, it's free!

More reading

This 'chef' is cooking up big returns

Is it time to lock in your mortgage rate?

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »