This week, Macquarie named 2 ASX All Ords retail stocks with material upside.
With the Reserve Bank of Australia (RBA) delivering a series of interest rate cuts this year and more expected to follow, retail stocks are back in favour.
Those looking for opportunities in this space might want to consider the following two S&P/ASX All Ordinaries Index (ASX: XAO) retail companies.
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Temple & Webster (ASX: TPW)
Temple & Webster is Australia's largest online-only retailer of furniture and homewares.
Temple & Webster shares have been among the best-performing ASX retail stocks in recent times. Today, the stock is nearly 150% higher than it was five years ago.
The company continues to win market share in the total furniture and homewares market, increasing its market share from 2.3% in FY24 to 2.7% in FY25.
When analysing its FY25 result, Macquarie said structural tailwinds would likely support further growth:
Near-term consumer demand tailwinds from interest rate cuts and home construction, alongside longer-term tailwinds from online retailing growth (Australian online penetration -12ppts vs US/UK average) should compound TPW's growth.
On the subject of valuation, the broker said the company's momentum underpins its valuation:
Whilst TPW appears expensive, even to longer-term forward-looking investors (37.2x FY28E P/E) – accelerating earnings momentum and a currently underutilised balance sheet suggest upside.
Macquarie has an outperform rating and $31.30 price target on the stock.
Given that shares closed at $23.09 on Wednesday, this suggests 36% upside.
Universal Store Holdings Ltd (ASX: UNI)
Universal Store operates a number of popular businesses, including Universal Store, Perfect Stranger, and CTC (THRILLS and Worship).
The ASX All Ords retail business has also proven to be a very successful retail stock over the past 5 years, climbing more than 100%.
In FY25, group sales grew 15.5% to $333.3 million. Perfect Stranger sales were the highlight, climbing 81.3% to $25.5 million.
During the last financial year, nine net new stores were opened. In FY26, between 11 and 17 new stores are expected to open.
Macquarie also described the gross margin expansion as encouraging, rising to just over 61% thanks to the new Perfect Stranger retail format rollout and increased private label penetration.
Macquarie has an outperform rating and price target of $10.20 on the stock.
Given that shares closed at $8.48 on Wednesday, this suggests around 20% upside.
On top of that, the company also pays an attractive dividend, with the current yield at 3.89%.
