JPMorgan says buy these two undervalued ASX shares with big dividend yields

These stocks have been rated as bargain buys.

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The broker JPMorgan has been scouring the market for opportunities and decided to rate the two ASX shares in this article as a buy. As a bonus, they both have appealing dividend yields, so investors can receive good cash flow just for owning them.

Keep in mind just because a broker says a share price might rise, it doesn't mean it will. But, it's definitely worth paying attention to where analysts are seeing value.

The two ASX retail shares in this article are still lower than they were a few years ago, so this might be the right time to invest.

Universal Store Holdings Ltd (ASX: UNI)

According to reporting by The Australian¸ broker JPMorgan just changed its rating on Universal Store shares to overweight, meaning a buy. The price target is $6.20, so the Universal Store share price could rise by around 10% over the next 12 months, according to the broker.

Universal Store owns a number of different youth fashion brands including Universal Store, THRILLS, Worship and Perfect Stranger.

The ASX share may have positively surprised investors in recent times, with the FY24 first-half result showing group sales growth of 8.5%, underlying earnings before interest and tax (EBIT) growth of 8.1% and statutory net profit after tax (NPAT) growth of 16.7%.

Other positives included the business opening a total of six new stores in the first half period, including three new Perfect Stranger stores, two new Universal Stores and one THRILLS store. It also grew its interim dividend by almost 18% to 16.5%.

According to Commsec, the company could pay a grossed-up dividend yield of 7.1% in FY25.  

Accent Group Ltd (ASX: AX1)

Broker JPMorgan has put an overweight rating on Accent shares, with a price target of $2.20. That implies a possible rise of around 14.5% over the next year.

The ASX share may be best known for the shoe retailing business The Athlete's Foot. It has some of its own businesses and also acts as the distributor for a variety of global brands, including Skechers, Vans, Ugg, Henleys, Hoka and Kappa.

The Accent share price has dropped close to 20% since 14 February 2024, as we can see on the chart below. It's much better value now amid difficult trading conditions.

It continues to open new stores, with at least 20 more planned for the second half. Management sees opportunities for new stores for both its core banners and new businesses.

Total owned sales in the year to date to the end of January were up 1.6% and owned retail sales over this period were up 5.6% thanks to new store openings. When retail conditions improve, Accent could be in a position to benefit. According to the estimate on Commsec, the company could pay a grossed-up dividend yield of 9.6%.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has positions in Accent Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended JPMorgan Chase. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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