I wouldn’t let the abject performance of Myer Holdings Ltd (ASX: MYR) and JB Hi-Fi Limited (ASX: JBH) put you off the retail sector. I think there are a number of shares in the sector that would be great investments.
Three that tick a lot of boxes for me are listed below. Here’s why I like them:
Accent Group Ltd (ASX: AX1)
I think that this footwear retailer could be a great option for investors. Accent Group, formerly known as RCG Corporation, was sold off last year amid concerns that its Athlete’s Foot, HYPE DC, and Platypus Shoes stores could be negatively impacted by Amazon’s arrival. This hasn’t proven to be the case and it is likely to be down to Accent having the exclusive license to sell certain popular brands in the Australian market. I expect its solid performance to continue beyond FY 2018, making it an attractive option due to its undemanding valuation and generous dividend.
Lovisa Holdings Ltd (ASX: LOV)
My favourite retail share on the Australian market would have to be Lovisa. This is largely because of the fashion jewellery retailer’s ambitious global expansion plans. I believe there is a significant runway for growth for the company thanks to the Asia, European, and U.S. markets. Unfortunately the market has caught on to its enormous promise and its share price has been driven notably higher. This has left its shares trading at around 35x estimated forward earnings. While I believe it is more than capable of delivering long-term earnings growth that justifies this premium, investors may want to consider just a small position or wait in hope for a potential pullback.
Premier Investments Limited (ASX: PMV)
Another retailer which is successfully expanding internationally is Premier Investments with its increasingly popular Smiggle business. The children’s stationery brand has been going from strength to strength in recent years and most recently reported a 26.7% increase in global half-year sales to $170.7 million. Supporting this growth was its sleepwear brand Peter Alexander. It achieved first-half sales growth of 15% to $114.4 million. Together the two brands now account for almost half of its total sales. Which, considering the positive outlooks for both brands, I believe bodes well for the company’s overall growth.
Where to invest $1,000 right 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 and has recommended 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 Scott Phillips.
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