Consumer sentiment up on major household items

Family finances viewed as improving.

In between reporting seasons it is hard to say how well retail companies are doing since their last earnings were released, but you can look at consumer sentiment to see what consumers are doing and what may be driving them. This helps you gauge how your portfolio stocks may behave.

The Index of Consumer Sentiment put out by Westpac (ASX: WBC) and The Melbourne Institute showed a slight drop in October, but still the uptrend that started in October 2011 remains intact, and stands at 108. A score of 100 is the balance of pessimistic and optimistic views, and above 100 means there are more optimists than pessimists in the survey.

Although respondents still had a pessimistic view of their current family finances, the figure improved from 82.6 to 87.7 over the past year. Their view of family finances over the next 12 months moved to the optimistic side from 98.9 to 108.5.

That upbeat view is also evident in their increased belief that it is a good time to buy a major household item, though buying a car was flat compared to last year in October. Their view on the time to buy a dwelling was still optimistic, but 7% down from last year — from 139.8 to 130.

That means there is still some reservation about the strength of the current economic recovery, but shoppers will be heading back to the stores. Lower interest rates are helping, but other factors like job security and company business confidence are hampering consumers.

The S&P ASX 200 Consumer Discretionary Index (ASX: XDJ) is up 50% since June 2012, and during that time household goods and electronics retailer Harvey Norman (ASX: HVN) has risen about 56% to $3.13 a share. Its leader, Gerry Harvey, would like to see interest rates cut further before Christmas to give sales a boost in light of the economic uncertainty.

Super Retail Group (ASX: SUL), which operates Supercheap Auto and sells outdoor and sports items, has jumped up about 85%, however it did acquire Rebel Sports and Amart All Sports in 2012, so that also affected overall earnings expectations and share price.

Department store retailers David Jones (ASX: DJS) and Myer Holdings (ASX: MYR) have risen only around 22% and 6.7% respectively in share price since the end of June 2012.

Foolish takeaway

Investors have to keep up with market and economic news when the companies themselves aren’t reporting sales data. Spending even an hour a week reading company and related industry news articles will keep you up to date on what’s happening.

You will also have a better sense of when your stocks are performing better than their peers, or when they are starting to show weakness, and may need a closer review or ultimately removal from your portfolio.

Not shopping for retail stocks? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

More on ⏸️ Investing

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 »

asx share price competitions represented by businessmen arm wrestling
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 »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »