With the S&P/ASX 200 Index (ASX: XJO) dropping 3% over the past 5 months, investors are at a crossroads.
Do you hold off to see which direction the market wants to head this year, or buy the dip now?
Celeste Funds Management provided some commentary to its clients recently, which may sway you to the latter for 2 particular consumer-focused ASX shares.
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'Further selling appears unwarranted'
Shares for women's fashion retailer City Chic Collective Ltd (ASX: CCX) actually dropped 25.6% since the start of December, before a massive 11.6% recovery on Friday to finish the week at $4.99.
It seems the market has woken up to the faith that Celeste Funds holds in the business.
"Further selling appears unwarranted," Celeste's memo read.
"With major marketplace partners Amazon.com Inc (NASDAQ: AMZN), eBay Inc (NASDAQ: EBAY) and The Iconic, we believe City Chic is ripe with opportunity as supply chain pressures ease."
Like most retailers, City Chic has been under pressure due to global supply chain disruption and exorbitant cargo costs.
But Celeste believes these concerns were flagged by the business well in advance and the share price has very much priced in those hurdles.
"City Chic advised they were well-stocked for the peak trading period, and with no physical store presence in the US they are also sheltered from the wage inflation and lockdown concerns impacting [rival] Torrid Holdings Inc (NYSE: CURV)'s 3Q."
Seven out of 9 analysts currently rate City Chic shares as a buy, according to CMC Markets.
'Ability to raise prices'
Breville Group Ltd (ASX: BRG) boasted a nice 5.4% return last month but has given all of that back plus more this month, to trade 4.1% down since the start of December.
The home appliance maker has been, like City Chic, hit by supply chain issues. But the Celeste team believes it has an ace up its sleeve.
"We believe Breville has the ability to raise prices, as it has done in the past," its memo to clients read.
"Longer term, we believe Breville has a significant opportunity to grow revenue supported by further penetration into new and existing markets, combined with the pandemic's impact on augmenting BRG's addressable market."
Other analysts are split on Breville, with 3 out of 6 rating the stock as a buy on CMC Markets.
Breville shares finished Friday down 1.44% at $28.84.
