The S&P/ASX 200 Index (ASX: XJO) stock Premier Investments Limited (ASX: PMV) has seen a rapid sell-off since reporting season. Now, one expert thinks the ASX retail stock is an excellent opportunity.
Premier Investments owns several Australian apparel retailers, including Peter Alexander, Jay Jays, Just Jeans, Dotti, Portmans, and Jacqui E. Children's stationery retailer Smiggle is another business in its portfolio. Premier Investments also owns large stakes in Breville Group Ltd (ASX: BRG) and Myer Holdings Ltd (ASX: MYR).
As we can see on the chart below, the Premier Investments share price is down by 13% since 3 September 2024.
Following this sell-off, some fund managers are viewing the company as a buy.
Bullish views on the ASX 200 stock
According to reporting by the Australian Financial Review, Chris Kourtis, a portfolio manager at Ellerston Capital, says Premier Investments is an appealing business right now.
Kourtis said to the AFR:
It's a stock I've known for a long time. I've missed the big run over the last few years, but we've recently gone back in.
I think it's the last chance to have a bite at the cherry before the strategy plays out.
Obviously, the market has been disappointed by their recent result. But at the end of the day, it's a very well-run business. The balance sheet is pristine.
He's also attracted to the potential plans of the company splitting off its apparel brands through a merger with Myer while demerging Smiggle and Peter Alexander. Kourtis said to the AFR:
They will demerge Smiggle and Peter Alexander. That's been pushed out, but not abandoned.
The focus now is on consummating the Myer merger with Premier's apparel brands, and that will add value to shareholders.
Kourtis also likes the ASX 200 stock's investments in Breville and Myer, which are worth over $1 billion. When combined with net cash, this means investors are "not paying a lot for the residual businesses".
The final reason the fund manager likes the business is because of one of the company's leaders, Solomon Lew. Kourtis explained:
The best retailer in Australia has hands on all over those businesses. He will walk into a store on a Saturday with a baseball cap and a fake moustache, sunglasses and see how long it takes the assistant to serve him.
I'll back Solly all day, every day. He doesn't miss a trick and that's why he's built a very successful business over 50 years.
More optimism about Premier Investments shares
Kourtis isn't the only fund manager who likes Premier Investments at the moment. Fund manager Blackwattle recently said in its monthly update that Peter Alexander's expansion into the UK "represents a large new market opportunity" for the company and could lead to growth into other countries over time.
Blackwattle also said that Premier Investments trades on a low double-digit price-earnings (P/E) ratio and a very large discount to other retailers. Blackwattle expects some of the discount to fall over time as it resolves some of its near-term issues, particularly regarding Smiggle.
Premier Investments share price snapshot
In 2024 to date, the ASX 200 stock is up 11% despite the recent sell-off.
