Since late March, the S&P/ASX 200 Index (ASX: XJO) has rebounded roughly 7%.
Despite this recovery, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) has remained flat.
The consumer discretionary index remains down more than 12% year to date.
There are several factors that could be keeping investors away from the sector:
- Interest rates – higher rates reduce spending
- Inflation – high inflation reduces discretionary income
- Consumer confidence – low confidence leads to cutbacks
Despite these headwinds, there remains long-term value in the sector, as these economic conditions ebb and flow over the long term.
For investors willing to deal with short-term volatility but looking for long-term opportunities, here are three consumer discretionary shares to consider.
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Aristocrat Leisure Ltd (ASX: ALL)
Aristocrat is an Australian gaming technology company licensed in around 340 gaming jurisdictions in more than 100 countries. Aristocrat offers a range of products and solutions in the gaming space, including poker machines and casino management systems.
Its share price has fallen 18% year to date and 25% over the last year.
It currently sits close to 52-week lows.
However, it could be a buy-low opportunity for the long term.
Recently, Macquarie retained its outperform rating and $63 price target on this consumer discretionary stock.
From today's price of close to $46.92, that indicates an upside of 34%.
The team at Morgans are also optimistic that the share price will recover.
The broker believes its shares are attractively priced right now, given its strong growth track record.
Harvey Norman Holdings Ltd (ASX: HVN)
Harvey Norman is a leading Australian-based retailer selling electrical, computer, furniture, and entertainment goods.
Its share price is down almost 34% year to date after a tough February and March.
Negative sentiment appears to be continuing this month, although it now appears to have been oversold.
It simply might now be too cheap to ignore.
Bell Potter seems to agree. The broker currently has a buy rating with a price target of $6.70.
From today's share price of $4.64, that indicates an upside potential of 44%.
JB Hi-Fi Ltd (ASX: JBH)
Finally, JB Hi-Fi is also sitting well below yearly highs.
The retailer of home entertainment and home appliance products has seen its share price fall more than 23% year to date.
Analysts at Bell Potter recently retained their buy rating on this retail giant's shares with a reduced price target of $90.
That target sits right around the average of 15 analyst forecasts via TradingView.
If this consumer discretionary stock reaches this target in the next 12 months, it would represent a 23% rise.
