Australians are locking away their wallets as they face steeply rising interest rates and higher costs of living from inflation.
In this sort of environment, there are sectors that will obviously suffer.
One is real estate. Higher loan costs mean lower demand, and lower property prices.
Another is discretionary retail. If consumers have to devote more of their pay packet to their loan repayments, they will start cutting out non-essential spending first.
But in the share market, like in life, there are always exceptions to the rule.
Here's a pair of ASX shares Marcus Today portfolio manager Thomas Wegner reckons are prime buys right now:
'Optimistic and resilient outlook'
Although JB Hi-Fi Limited (ASX: JBH) released its annual report on Monday, its numbers were already known from a preliminary report in July.
Wegner told The Bull the market liked what it saw, with the JB Hi-Fi share price shooting up 5% that morning.
"Top and bottom lines came in ahead of most estimates."
At the time, forward guidance wasn't offered, but Wegner saw enough in the rear-view to have confidence about the electronics retailer.
"The results still painted an optimistic and resilient outlook by the consumer," he said.
"Sales momentum was strong throughout the year, with total sales up 3.5% to $9.2 billion."
The wider professional community is still somewhat unsure about a consumer discretionary stock like JB Hi-Fi. Out of 15 analysts surveyed on CMC Markets, six rate it as a buy, three as a hold, and six recommend selling.
The JB Hi-Fi share price has fallen about 6.6% since the start of the year. The stock does pay out a 5.9% dividend yield.
Real estate market might dip, but there are plenty of offsets
Australia's property prices caught fire for a couple of years after an initial pause in activity when the COVID-19 pandemic first arrived.
But with interest rates rising this year, even hot real estate markets like Sydney and Melbourne have cooled.
This still doesn't stop Wegner from recommending online classifieds site REA Group Limited (ASX: REA) as a buy though.
"This digital advertising business specialising in property posted revenue of $1.170 billion in fiscal year 2022, up 26% on the prior corresponding period," he said.
"Net profit of $408 million was up 25%."
The company did admit the Australian residential property market would slow down as rate hikes start to bite, but there are enough tailwinds to offset that impact.
"It believes demand will be supported by robust household balance sheets, low unemployment and increasing migration."
Wegner isn't the only analyst going against the fortunes of the real estate sector to back REA's credentials.
The team at Morgans last week also recommended buying the stock after its financials were revealed.
"REA remains one of the highest quality franchises in our coverage," said associate analyst Steven Sassine on the Morgans blog.
"And whilst FY23 may exhibit some volatility (e.g. macro impacts on listings volumes), we believe management has levers to potentially pull (e.g. yield) in such an environment."
