Experts have identified two ASX shares that look good value and have rated them as buys.
Plenty of businesses in the retail sector have relatively low price/earnings (p/e) ratios. They can also offer larger dividend yields. However, sometimes downturns can lead to variable demand for products.
These are two ASX shares that are currently rated as opportunities.
Accent Group Ltd (ASX: AX1)
Accent is a retailer of multiple shoe brands. It owns some brands and it acts as the distributor for others.
Some of the brands are: CAT, Dr Martens, Glue Store, Hoka, Hype, Platypus, Skechers, Stylerunner, The Athlete's Foot, Trybe, Timberland and Vans.
Morgan Stanley is one of the brokers that rates Accent as a buy right now. The broker has a price target of $2.70. That's a possible rise of 90% over the next year. Morgan Stanley thinks the ASX share can benefit from life returning to normal after COVID-19 as well as the ongoing opening of new stores.
Since the start of 2022, the Accent share price has fallen around 40%. That's despite a recent trading update that noted a higher profit margin.
The company pointed out it's expecting to open 140 stores in FY22. Meanwhile, it will close stores where "sustainable renewal terms" cannot be achieved. Accent is focusing on growing some of its brands and making choices that improve the return on investment (ROI) in businesses and brands.
Sales are improving compared to the start of the second half of FY22, but were still subdued compared to expectations. However, Accent has continued to focus on a 'full price, full margin' sales strategy. This strategy has improved the gross profit margin ahead of expectations and last year. It will be interesting to see how this will play out for the ASX retail share.
Morgan Stanley thinks that the Accent share price is now valued at under 10x FY23's estimated earnings.
JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi is one of the largest ASX retail shares. It sells a variety of electronics and home appliances such as phones, laptops, fridges and TVs.
One of the brokers that currently rates the ASX share as a buy is Macquarie. It has a price target of $57.80 on the business, implying a potential rise of around 20% over the next 12 months.
Despite seeing elevated sales since the start of COVID-19, JB Hi-Fi continues to experience demand and sales growth.
In a recent sales update for the three months to 31 March 2022, the company said that JB Hi-Fi Australia sales rose 11.9%, JB Hi-Fi New Zealand sales increased 4.8% and The Good Guys sales rose 5.5%. It also said that sales momentum has continued into the fourth quarter of FY22.
Based on the forecast FY23 numbers, Macquarie thinks the JB Hi-Fi share price is valued at 13x FY23's estimated earnings with a projected grossed-up dividend yield of 7.25%.
