With bond yields widening in the United States, many high PE shares on the Australian share market such as Afterpay Touch Group Ltd (ASX: APT) and WiseTech Global Ltd (ASX: WTC) were dragged lower last week.
This has some experts suggesting that this could be the time for value shares to shine.
While I wouldn’t necessarily ditch everything and buy value shares just yet, I do think it could be a good idea to have a few in your portfolio.
With that in mind, here are three value shares I think are worth considering right now:
Adairs Ltd (ASX: ADH)
Adairs is a home furnishings retailer that was an impressive performer in FY 2018. Thanks to the success of its focus on large homemaker stores, its Linen Lovers loyalty program, and strong online sales growth, the retailer posted a 45.4% increase in profit to $30.6 million. On Friday the company provided a trading update which revealed that same store sales have remained strong and are up 5.2% during the first 13 weeks of FY 2019. Despite this solid growth its shares are priced at just 13x earnings.
Paragon Care Ltd (ASX: PGC)
Paragon Care is an integrated services provider to both the healthcare and aged care markets. Over the last five years the company has grown its earnings by an average of 27% per annum. Despite this strong growth and its positive outlook, its shares are changing hands at just 13x earnings today. Interestingly, the company recently raised $45.2 million through a placement of shares with China Pioneer to be used to fund acquisitions of complementary healthcare businesses. This money was raised at a price 27% higher than where its shares stand today.
Super Retail Group Ltd (ASX: SUL)
Super Retail was another strong performer in the retail sector during earnings season. It posted a 26% increase in net profit after tax to $128.3 million thanks to positive performances across most of its portfolio. Pleasingly, management revealed that the company has had a solid start to FY 2019, putting it in a position to deliver further earnings growth this year. So with its shares priced at 12.5x earnings and offering a trailing fully franked 5.3% dividend, I think Super Retail could be a great option for value investors.
And here are three more shares that I think offer a compelling risk/reward 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 AFTERPAY T FPO, Super Retail Group Limited, and WiseTech Global. The Motley Fool Australia has recommended Paragon Care 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.