One of the best opportunities on the ASX right now could be the Lovisa Holdings Ltd (ASX: LOV) share price. I believe the market is drastically undervaluing the company's long-term potential.
The chart of the last 12 months looks rough. It's down 35% in the last year and it has fallen 50% from late August 2025.
When such a promising business falls so much, I think it gives brave investors an appealing chance to invest at a cheaper price.
For me, there are three great reasons to own Lovisa that can drive shareholder returns from the business.
Image source: Getty Images
Store rollout
Lovisa is an affordable jewellery retailing business with a global store network. I'd describe it as one of the most international businesses on the ASX.
There are at least five stores in the following markets: Australia, New Zealand, Singapore, Malaysia, Hong Kong, South Africa, the UK, Ireland, Spain, France, Germany, Belgium, the Netherlands, Austria, Switzerland, Poland, Italy, the UAE, the USA, Canada, Mexico, its franchise in the Middle East and Africa, and its franchise in South America.
The company has expanded its presence significantly over the last decade and I think it bodes well for future growth that the company has so many markets it can expand in.
Every year, Lovisa reports strong store count growth. At the end of the FY26 half-year result, the company ended with 1,089 stores. That represented growth of 6.4% since the end of FY25 and 15.5% from the FY25 first-half.
If the business kept growing its store count by 15% per year, it could double in size in five years. It may not grow at that pace in the future, but there is such a large addressable market that it could grow by an average of at least 10% per year for some time, in my view.
Strong growth of financials
It's one thing for the store count to grow, but the business is delivering strong growth with the most important financial metrics.
For starters, the existing store network is delivering comparable revenue growth, which is a good sign of its organic performance. In the FY26 first half, comparable store sales grew by 2.2%. Excluding any new stores, we can see the business is growing.
But, thanks to the new store growth, its financials are performing strongly.
In the FY26 first-half, Lovisa underlying revenue grew 22.7% and net profit grew 21.5%. Those figures ignore its new business in the UK called Jewells, which sells slightly higher-priced products than Lovisa.
If its revenue can continue growing at a compound annual growth rate (CAGR) of at least 15%, then it will double in size in five years or less.
All the business needs to do is continue rolling out more stores and maintaining positive comparable store sales growth, which should lead to solid returns over the long-term.
According to the projections on Commsec, the Lovisa share price is valued at 26x FY26's estimated earnings. The forecast then suggests earnings per share (EPS) could climb by 27% in FY27 and another 6% in FY28.
Growing dividend payouts
Not only is profit steadily growing – a key tailwind for the Lovisa share price – but the dividend could grow in the future too.
Bigger dividends mean stronger shareholder returns, regardless of what happens with the Lovisa share price.
According to the projection on Commsec, the Lovisa dividend is forecast to rise to 88.6 cents per share in FY27 (a 4.1% dividend yield) and increase again to 94.8 cents per share in FY28 (a 4.4% dividend yield).
I believe Lovisa is one of the most attractive ASX shares to buy right now, though it's not the only appealing idea out there.
