With interest rates rising rapidly and an economic downturn expected to follow, the retail sector is somewhat on the nose with ASX investors at the moment.
But one analyst reckons he's found a retailer stock to pick up now that can withstand plummeting consumer confidence.
"Lovisa Holdings Ltd (ASX: LOV)'s a buy for us," said senior analyst Shaun Weick in a Wilson Asset Management video.
"We think this one's a diamond in the rough."
Weick admitted his team is "cautious" on the retailer stocks because of the gloomy economic outlook.
"But we think fast fashion jewellery is largely recession-proof."
The share price for Lovisa has lost around 11% so far this year. It does pay out a handy dividend yield of 3.1%, according to Google Finance.
Lovisa's expansion strategy
According to Weick, the company is banking on new store rollouts to fuel future growth.
"We can see capacity for this business to more than triple its current footprint," he said.
"They've opened up five new markets recently. And if we look at management's LTIs [long-term incentives], they suggest that there's significant upside to consensus earnings expectations."
Lovisa is scheduled to report its preliminary numbers on 24 August.
Other professionals also share Weick's enthusiasm for the jewellery retailer. Eight out of 10 analysts surveyed on CMC Markets currently rate Lovisa as a strong buy.
And just last week, The Motley Fool reported that Morgans analysts thought Lovisa could end up as "one of the biggest success stories in Australian retail".
That team thought the dividend could grow immensely in the future from international expansion.
"We do not think there is any lack of opportunity," a Morgans memo read.
"In the US, for example, Lovisa now has 81 stores, representing 0.25 stores for every million people, compared to Australia with 158 stores, [which is] 6.15 stores for every million people."
The Motley Fool's James Mickleboro reported that Morgans has a buy rating and a $21.50 price target.
The Lovisa share price closed Thursday at $17.62.
