If you are on the hunt for some opportunities in the beaten-down consumer sector, then it could be worth hearing what Bell Potter is saying about a number of shares from this side of the market.
That's because it has picked out three Australian shares that it believes could be top buys right now.
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What is the broker saying?
The good news is that Bell Potter believes the consumer cycle could be approaching its low point. It expects FY 2027 to be the bottom of the cycle for earnings across consumer shares. It said:
FY27 as a low point in the cycle. We expect challenging trading conditions over the next ~9 months and sit below Consensus earnings estimates for FY26e on average across our Consumer Discretionary coverage as we view FY27 as the cyclical low point for most retailers. We expect flat to nominal sales growth, gross margin pressures however somewhat offset by the AUD strength, and cost deleverage ahead.
Unfortunately, this means that conditions are likely to remain subdued in the immediate term. It adds:
We expect a relatively nominal midyear seasonal sale period in Australia given the prolonged discounting activity from May, however broadly similar depth of discounting by retailers vs last year. While trends may see some plateauing post the ongoing mid-year sale period, we view an overall improvement in discretionary spend weighing towards 2Q of FY27e.
Which ASX shares are buys?
Bell Potter has named JB Hi-Fi Ltd (ASX: JBH), Universal Store Holdings Ltd (ASX: UNI), and Nick Scali Limited (ASX: NCK) shares among its top picks in the consumer sector.
Commenting on its preference, the broker said:
Selective preferences in the sector. We continue to favour our key preferences, JBH, UNI and NCK considering their market position, gross margin levers and balance sheet strength vs current valuation.
According to the note, the broker has a buy rating and $87.00 price target on JB Hi-Fi's shares. Based on its current share price of $83.60, this implies potential upside of 4% for investors. It also expects JB Hi-Fi to offer an attractive dividend yield, sweetening the deal further.
For Nick Scali shares, Bell Potter has a buy rating and $25.00 price target on them. Based on its current share price of $16.41, this implies potential upside of 52% for investors over the next 12 months.
Finally, Universal Store shares could have plenty of upside. The broker has put a buy rating and $9.30 price target on them. Based on its current share price of $7.74, this suggests that upside of 20% is on the cards.
