Why these 3 retail shares are in my shopping basket

With low-cost operators and online behemoths aiming to steal market share from Australian retailers, I think investors are low on options when it comes to picking retail shares to invest in.

But that doesn’t necessarily mean there aren’t any quality investments to be made. Here are three retail shares which I think could be worth adding to your shopping basket:

Although the Bapcor Ltd (ASX: BAP) share price has rallied strongly since last year, at 25x trailing earnings I think the auto parts wholesaler and distributor’s shares are still good value today. After all, thanks to the impressive performance of all its segments, the company delivered a stunning 44% increase in pro-forma half-year net profit after tax. Pleasingly I expect more of the same in the second-half. For this reason I would class Bapcor as a buy.

The Greencross Limited (ASX: GXL) share price may have gone sideways for the last 12 months, but I feel confident the long-term direction is up. With an estimated 63% of Australian households owning a pet, I believe Greencross is in a great position to profit thanks to its 164 veterinary practices and 237 retail stores throughout Australia. As well as growing organically, I believe the fragmented veterinary market provides the company with a significant opportunity to grow through acquisitions. At just 17x annualised earnings I think Greencross would be a great buy and hold investment.

The Premier Investments Limited (ASX: PMV) share price has fallen around 17% in the last 12 months despite being a rare highlight in a struggling retail industry. This could make it an opportune time to buy its shares in my opinion. In its recent half-year results the company reported a 10.6% increase in earnings before interest and tax to $93 million. A key driver of this growth was the company’s fast-growing Smiggle brand. Smiggle’s global sales rose 26.4% during the period, meaning the brand now generates 23% of total company sales. With its international expansion continuing to gather pace, I believe the second-half will be equally strong.

Finally, this fourth retail share is also a buy in my opinion. Especially with its HUGE dividend yield.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Premier Investments Limited. Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Bapcor and Greencross Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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