Consumers and home owners got another reprieve from higher interest rates as the RBA decided to keep its target cash rate at 2.5%. It wants to foster the economic growth already started. Although China has been showing some weakness lately with manufacturing, the Aussie dollar hasn't tumbled below 90 cents to the US$.
A low interest rate also doesn't attract as many currency traders and investors, yet for the time, things seem to be in a temporary balance.
This will benefit retailers in two ways. One, easier credit and more disposable income means potentially more shoppers in the stores. Two, for those retailers who import goods, the stable yet relatively high currency exchange makes those goods cheaper to purchase.
Here are three stocks that could be ripe for higher levels of business.
JB Hi-Fi Limited (ASX: JBH)
The electronics retailer is expanding its store network with a new format called JB Hi-Fi HOME that will also carry white goods and kitchen appliances. It expects that it can add up to 50 new format stores by the end of 2016.
Its interim sales were up and net profit gained 10%. The interim dividend was increased 10% to 55 cents per share.
RCG Corporation Limited (ASX: RCG)
The shoe retailer and distributor has in the past seven years raised its underlying net profit each year and has maintained a high return on equity in the high teens to early 20s during that time.
It operates The Athlete's Foot store chain in Australia, as well as distributes such brands as Merrell, Saucony, Cushe, Chaco, CAT (Caterpillar) and Sperry Top-Sider.
Breville Group Ltd (ASX: BRG)
The company develops and distributes small electric kitchen appliances both in Australia and internationally. You may know its products through brands like Kambrook, Ronson, Breville and Philips. Its newest product line for the UK market is Sage, designed for more upscale style.
You wouldn't have done badly following this stock over the past five years as it went from about $1 to $10 earlier this year. It has pulled back to $9.14 now, but is still up about 16% in the last three months.
Revenue has seen a decent rise during that time, yet its profit margins have expanded, making earnings rise quickly. First-half net profit was slightly down about 1.6%.
When looking for investment opportunities, apart from a company cutting costs or making improvements for earnings, a good investor needs to know what economic conditions will help or hinder a business.
