Bell Potter names the best ASX retail stocks to buy in FY25

These three stocks could be top buys according to the broker.

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Do you want some retail sector exposure for your investment portfolio?

If you do, then it could be worth looking at the ASX retail stocks in this article.

They have been named as best buys for the new financial year by analysts at Bell Potter. Let's see what the broker is saying.

What is the broker saying about ASX retail stocks?

Firstly, Bell Potter explained what it is looking for in the sector right now. It said:

We continue to look for retailers with differentiating customer value propositions and balance sheet strength and support names who may grow via market share expansion and have exposure to the customer categories who could benefit in the current consumer backdrop.

One ASX retail stock that has been given the thumbs up is Premier Investments Limited (ASX: PMV). Bell Potter has a buy rating and $35.00 price target on the Smiggle and Peter Alexander owner's shares.

It believes the market is undervaluing its shares, especially given its demerger plans. It explains:

PMV is currently trading on ~15x FY26e P/E (BPe) which we think is conservative given the value that we see emerging from the potential demerger of PMV's two key brands, Smiggle and Peter Alexander which we believe are global roll-out worthy and highly profitable. We see further upside from the higher ownership PMV shareholders could receive in the Myer Group (MYR) given the potential to grow post MYR's turnaround phase and synergies from merging with PMV's apparel brands

What else?

Another ASX stock that has been tipped as a buy is youth fashion retailer Universal Store Holdings Ltd (ASX: UNI). The broker has a buy rating and $6.15 price target on its shares.

Bell Potter is positive on the company's outlook due to margin expansion opportunities and its store rollout. It said:

Management execution remains a key strength for UNI and we see good growth trajectory for the name given the building of core brands while growing its store rollout. In our view, the higher margin sales from the majority private label sales should become a major driver of margin improvement and earnings growth, in an expanded store footprint. While we remain cautious on the overall consumer sentiment, given the return to positive comps while cycling elevated pcp through Jan-Feb (+1% for Universal Store and +10% for Perfect Stranger) and potential benefits from income tax cuts to the customer demographic, we think UNI is well placed given supportive 4Q comps.

A final ASX retail stock to consider according to Bell Potter is Propel Funeral Partners Ltd (ASX: PFP). It has a buy rating and $6.20 price target on its shares. It said:

While PFP remains to be one of the few listed deathcare players globally, we think the premium to the peer group PFP trades at is justified considering the current market position, M&A firepower/opportunity and successful track record.

Motley Fool contributor James Mickleboro has positions in Universal Store. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Premier Investments. 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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