Why I think these retail shares are in the buy zone

In the not so distant future retail behemoth Amazon is widely expected to launch in Australia and shake up the retail industry.

While some retailers such as JB Hi-Fi Limited (ASX: JBH) may be negatively impacted by Amazon’s arrival, I believe there are others that will continue their growth unabated.

Two shares which I think are worth looking at in the retail industry now are listed below:

Noni B Limited (ASX: NBL)

Through W Lane, Table 8, BeMe, and its eponymous Noni B brand, this retail company operates in the middle-aged women’s fashion clothing market. Not only is its target demographic less likely to shop online with Amazon compared to younger demographics, but is a fast-growing demographic thanks to Australia’s ageing population.

The company has had a strong start to FY 2018 and looks likely to build on FY 2017’s impressive result. At a little over 16x full-year earnings, I think Noni B is worth considering as an investment today.

Premier Investments Limited (ASX: PMV)

The main attraction to this retail conglomerate is its fast-growing Peter Alexander and Smiggle brands. These two niche brands now account for approximately 40% of its total sales, but this could yet grow even further in the coming years.

Management expects Smiggle’s sales alone to exceed $400 million by FY 2020 thanks to its global expansion, representing growth of 67% on FY 2017. Similarly, Peter Alexander’s sales are forecast to grow to over $250 million during the same period. This will be an increase of almost 31% on FY 2017’s sales.

All in all, I believe this puts Premier Investments in a position to deliver above-average earnings growth for the foreseeable future. This could make it a great buy and hold investment option.

As well as Premier Investments and Noni B, I think these top shares are in the buy zone now.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Premier Investments 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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