Insights

3 reasons why the Temple & Webster (ASX:TPW) share price could be a buy

There are a few good reasons why the Temple & Webster Group Ltd (ASX:TPW) share price could be a buy right now.
The post 3 reasons why the Temple & Webster (ASX:TPW) share price could be a buy appeared first on The Motley Fool Australia. –

jump in asx furniture retailer share price represented by lounge chair and ottoman flying in the air

The Temple & Webster Group Ltd (ASX: TPW) share price could be an opportunity to look at right now. 

Temple & Webster has seen its shares climb by 187% over the last year. It may not be able to do the same thing over the next 12 months, but the retailer may still be a really good ASX share to think about for the coming years.

Why? These factors could make it a good investment today:

Benefiting from multiple trends

Temple & Webster is an e-commerce retail business. It’s benefiting from the large increase of customers who are buying things online. Some customers are buying furniture and homewares for the first time online, whilst others might be buying more frequently online.

There’s also the household finances situation that are helping the ASX share. Government stimulus has helped the overall picture. Households have been saving more than normal.  Spending for some people may be redirected from holidays to their homes.

Temple & Webster estimates that more than 20% of furniture and homewares were bought online in the US during 2020. Management believe that Australia is following the same trajectory. It estimates that in 2020, around 9% of Australian furniture and homewares were bought online – almost double the percentage of 2019. Online penetration in both markets is expected to continue to increase significantly.

The company thinks COVID-19 has permanently accelerated online adoption in the Australian furniture and homewares market.

Investing for growth

Over the longer-term, growth shares have the ability to deliver stronger long-term returns because of the compound growth rate.

Management believe there is scope for significant online growth. It’s planning to invest heavily in a number of areas to capitalise on this opportunity.

It’s going to spend on marketing to build strong brand awareness to achieve national brand status within the next three years. This should drive both first-time and repeat customers.

Temple & Webster aims to increase its conversion with tactical pricing and promotions.

The company will continue to invest in the customer experience with enhanced technology, data and personalisation and delivery experience.

Investing into 3D and artificial intelligence capabilities to make the customer shopping journey easier is another area.

It’s planning to improve and differentiate its range with new category additions, private label expansion, new product development and exclusive ranges with suppliers.

The final strategy of the company is to grow business to business sales, with bigger operational teams to capitalise on the return of demand in the commercial sector.

Temple & Webster’s choice to invest across all of these areas will result in a low earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 2% to 4%. It wants stay profitable though. Management are hoping for strong double digit revenue growth.

After that, the company is expecting higher profit margins with scale benefits.

Recent sell-off

The Temple & Webster share price is currently down 10% in just a week. It’s also down 27% since 25 January 2021. The entry point of an investment plays a key role in dictating the returns for an investor.

This lower price could be an opportunistic time to think about Temple & Webster shares after some investors decided to sell.

The long-term focus on growth could lead to stronger returns over the coming years if it’s able to keep capturing market share.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 reasons why the Temple & Webster (ASX:TPW) share price could be a buy appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!