Why I would buy these retail shares today

While the abject performance of retailers such as Myer Holdings Ltd (ASX: MYR) and Oroton Group Ltd (ASX:ORL) and the arrival of Amazon has scared some investors off the retail sector, I still think the sector has some quality investment options that are worthy of inclusion in a balanced portfolio.

Three retail shares which I think are in the buy zone today are listed below:

Baby Bunting Group Ltd (ASX: BBN)

While the shares of this baby products retailer are no longer an absolute bargain buy following a strong rebound, I still feel they represent great value for money. Baby Bunting has been a victim of its own success this year. Its strong performance has led to the closure of competitors and subsequent clearance sales. These clearance sales will be a short term headwind and are expected to cause flat earnings this year, but moving forward I expect Baby Bunting to grab a greater share of the market and deliver strong earnings growth.

Greencross Limited (ASX: GXL)

As well as its veterinary practices across Australia and New Zealand, Greencross has a retail presence through the Petbarn brand. Thanks partly to its increasingly popular loyalty program, like-for-like sales in its Australian retail business grew 4.3% in FY 2017. Another key driver has been the roll out of its in-store clinics. Approximately 17% of its stores now have a clinic inside, but management intends to grow this to over 60% in the future. I think this is a retailer well worth considering as a buy and hold investment.

Noni B Limited (ASX: NBL)

When it comes to retail shares I love those that operate within niches. Noni B and its collection of brands does exactly that, serving the mature women’s fashion market. Last week the company provided a positive trading update which revealed that it expects to report first-half EBITDA of $22 million. This will be more than 50% higher than the prior corresponding period’s EBITDA of $14.3 million. Furthermore, it is just a touch less than FY 2017’s full-year EBITDA of $22.9 million, which also included a 53rd week.

Here are three more top shares which I think investors ought to consider this year.

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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 and has recommended 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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