It’s fair to say it’s been a disappointing start to the year for ASX retail shares. Many of the biggest retailers have shed billions in value and watched their shares plummet lower in 2020.
But with the government looking to ease COVID-19 restrictions and the economy picking up again, are ASX retail shares back in the buy zone?
Which ASX retail shares are worth buying today?
I think in these uncertain times it’s not as simple as just buying across the sector. That’s particularly the case with retail which varies greatly and will be impacted in different ways in 2020.
JB Hi-Fi shares are down 8.06% in 2020, while the Harvey Norman share price has slumped 26.46% this year (at the time of writing). JB Hi-Fi has been one of the outperforming ASX retail shares thanks to increased home electronics sales.
More Aussies are working from home due to the current restrictions. As a result, JB Hi-Fi has seen a surge in computer monitor and other work-related sales in 2020, while Harvey Norman has lagged its rival given its more diversified product areas.
That being said, if you’re after an income boost this year, Harvey Norman could be an option. The ASX retail share is yielding 10.89%, but I do think that may be slashed as a result of reduced earnings in 2020.
One other option in the retail sector may be Scentre Group (ASX: SCG). Scentre is an Australia real estate investment trust (A-REIT) that operates the Westfield shopping centres across Australia and New Zealand.
Scentre shares have been smashed in 2020 and are trading 43.30% lower in 2020. That could mean Scentre shares are a bargain to be snapped up, in anticipation of shopping centres seeing increased traffic this year upon re-opening. Scentre is a top ASX retail dividend share with a tidy 8.41% dividend yield on offer right now.
There are many ASX retail shares that could be in the buy zone right now. Given the uncertainty ahead, I wouldn’t rely solely on price-to-earnings (P/E) ratios or dividend yields at the moment. The key is to buy and hold companies with strong balance sheets and stable tenants that can weather the current storm.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. 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.