Picking out 'safe' ASX shares in the consumer discretionary sector is a tough ask. For one thing, there is really no such thing as a 'safe' ASX share, no matter what sector of the market you are looking in.
If you want absolute certainty that you won't lose money on an investment, the share market is the wrong place to look.
No one can predict how the market will price any asset. You might think a share is worth a certain amount for whatever reason. But if the market doesn't agree with you, there's not much you can do about it.
But even if we do assume you can get pretty close to a safe ASX share, the consumer discretionary sector is a fraught place to search anyway – it's all in the name. Consumer discretionary stocks tend to sell goods or services that consumers may or may not purchase depending on their economic circumstances.
When a downturn or recession hits, these consumers tend to cut back on discretionary items such as new clothes, cars or electrical appliances.
That makes the companies that sell them inherently cyclical.
But this doesn't mean there aren't some deals to be found in this space right now. So today, let's discuss three consumer discretionary shares that I think you can call 'safe' relative to their peers for a long-term investment today.
3 'safe' ASX consumer discretionary stocks today
Super Retail Group Ltd (ASX: SUL)
Super Retail Group is the ASX retail share behind popular chains like Super Cheap Auto, Macpac, Rebel and BCF.
I like this retailer because it is resistant to the typical economic cycle that affects other consumer discretionary shares. Australians tend to keep shopping at stores like Super Cheap and BCF regardless of the economic weather.
To illustrate this defensiveness, Super Retail posted a robust half-year earnings report in February. This report showed the company increasing half-year revenues by 3.2% despite the ongoing cost-of-living crisis.
Super Retail shares also offer a 5.75% fully franked dividend yield today.
JB Hi-Fi Ltd (ASX: JBH)
JB is another ASX consumer discretionary stock that I think makes for a great investment in any economic climate.
This company has shown a remarkable ability to move with the times. Two decades ago, it mainly stocked hi-fi, DVDs, music, and video games. But today, JB is more known as a destination for electronics, home appliances, and office equipment. That's for both its eponymous chain of JB Hi-Fi stores and its Good Guys side hustle.
JB Hi-Fi has been struggling with a downturn in consumer demand over the past year.
However, I think the 10% drop in the JB share price that we've seen over the past couple of months has left this consumer discretionary stock looking pretty cheap today on a price-to-earnings (P/E) ratio of under 14. That comes with a fully franked dividend yield of 4.7%. It could be a great entry point for long-term investors.
Premier Investments Limited (ASX: PMV)
A final stock that you might name amongst the 'safe shares' of the consumer discretionary sector is Premier Investments. Like Super Retail Group, this company owns a large portfolio of successful Australian stores, including Peter Alexander, Smiggle, JayJays, Dotti, and Just Jeans.
As with Super Retail's businesses, these stores seem to be more resistant to adverse economic circumstances than most. Over the first half of FY2024, Premier Investments posted a 1.65% rise in statutory net profits after tax, as well as a hike to its interim dividend.
Premier's $209.8 million in earnings before interest and tax during the half was a 66.4% increase over the company's earnings during the first half of FY2020.
I also think that Premier's plans to spin off its profitable Smiggle and Peter Alexander divisions will be beneficial to long-term investors.
Right now, Premier shares are trading on a fully franked dividend yield of just over 4%.
