Meet the 3 best retail stocks your money can buy

The 28.6% beating which Myer Holdings Ltd (ASX: MYR) share price has taken in the past five days is a telling sign that there are issues confronting the retail sector.

However, judging by the 8% jump in Premier Investments Limited (ASX: PMV) yesterday, there are still investment opportunities amongst the sector.

There’s more to the retail sector than meets the eye

When it comes to retailers most investors think of footwear and apparel businesses such as Myer and Premier Investments. However, the retail sector actually incorporates a much wider range of businesses. Here are three worth considering.

  • Vita Group Limited (ASX: VTG) operates a number of popular telecommunications stores including Telstra, Fone Zone and Next Byte stores. Australia’s love affair with the latest mobile devices and gadgets doesn’t appear to be slowing which bodes well for Vita Group. For the 12 months ending June 2014, earnings per share (EPS) grew from 4.4 cents per share (cps) to 5.8 cps.
  • Thorn Group Ltd (ASX: TGA) is best known for its retail brands Radio Rentals and Rentlo, however it is its niche financial services offerings such as Thorn equipment finance, Thorn Money and Cash First which are particularly exciting growth opportunities. The company earned 18.9 cps in FY 2014. According to one analyst consensus the group is forecast to grow earnings to 20.6 cps in FY 2015.
  • Dick Smith Holdings Ltd (ASX: DSH) is a relatively new addition to the ASX as a standalone business, however shareholders in Woolworths Limited (ASX: WOW) will be familiar with the group’s operations as it was previously owned by Woolworths. In what may partially be a timing issue, Dick Smith has struggled to trade consistently above its initial public offer price of $2.20, yet it has managed to beat profit forecasts and looks a reasonable investment.

Discover our top dividend stock for 2014-2015

The share prices of many retail stocks have been struggling lately which has made their dividend yields increasingly attractive. The retail sector is certainly a place for income-seeking investors to find high yielding stocks, but even the above three stocks aren't our #1 dividend stock! Every year, Motley Fool investment advisor Scott Phillips hand-picks 1 ASX dividend stock with outstanding potential. Just click here to download your free copy of "The Motley Fool's Top Dividend Stock for 2014-2015" today.

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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