The retail sector is one of the biggest and most important sectors of Australia's economy. However, just because it's big doesn't mean it's a good investment.
There are plenty of reasons why investors should feel apprehensive of most retail businesses but I think there are a few that are definitely still worth buying:
Bapcor Ltd (ASX: BAP)
Bapcor is the largest automotive spare parts company in Australia. It also has a large retail chain of Autobarns around the country. Bapcor is doing a good job of optimising the business to grow profit organically. I think it could be a good hold over the next couple of years.
Bapcor is trading at 31x FY16's earnings with a grossed-up dividend yield of 2.95%.
BWX is the owner of Sukin, the largest natural beauty brand in Australia.
Management have done a great job of winning the Australian market and now they're taking the Sukin brand across the globe. The UK and Canadian markets are proving to be fruitful ground. The USA market is next after acquiring American natural beauty brand Mineral Fusion.
BWX is currently trading at 29x FY17's estimated earnings with a grossed-up dividend yield of 2.04%.
Foolish takeaway
I think both businesses will generate strong long-term performance, which is why I'm a shareholder in both of them.
I think BWX will be the one to produce the best long-term growth due to its rapidly growing international sales, so I'd rather invest in BWX than Bapcor at the current prices.
