4 ASX retail shares that Morgans thinks are a ‘Buy’

A strong Aussie dollar, rising household savings and an inability to travel could see these ASX retail shares deliver more in 2021.
The post 4 ASX retail shares that Morgans thinks are a ‘Buy’ appeared first on The Motley Fool Australia. –

rising retail asx share price represented by excited shopper holding lots of bags best buy

February reporting season was a mixed bag for ASX retail shares despite strong half-year results across the board.

Morgans has run the ruler over a number of ASX retail shares, citing the rising Australian dollar, ongoing vaccine roll out and strong household savings as factors that will support retailers. 

Here are four ASX retail shares that received an “Add” rating by Morgans on 3 March. 

1. Adairs Ltd (ASX: ADH) 

The Adairs share price topped out and hit a record all-time high on the day its half-year results were released. The company delivered outstanding growth with a 34.8% increase in sales to $243.0 million while statutory net profit after tax surged 233.4% to $43.9 million. 

Morgans believes that, while retail sales will moderate in a post-COVID world, Adairs’ earnings will normalise at a materially higher level. Earlier this week, the broker retained a $4.50 price target for Adairs, which represents a 20% upside from today’s prices. 

2. Baby Bunting Group Ltd (ASX: BBN) 

The Baby Bunting share price took a 6% dive on the announcement of the company’s half-year results. Baby Bunting announced a 16.6% increase in sales to $217.3 million and pro forma net profit after tax of $10.8 million, a 43.5% increase on the prior corresponding period. 

Morgans is bullish on the company’s expansion plan to establish a multi-channel retail proposition in New Zealand, with its first store anticipated to open in FY22. 

On 3 March, the broker retained its $6.39 share price target for Baby Bunting. This represents an almost 24% premium to today’s Baby Bunting share price 

3. Breville Group Ltd (ASX: BRG) 

The Breville share price also experienced a similar effect as Adairs on the day its own half-year results were announced on 16 February. Breville shares briefly hit an all-time record high of $32.85 following the company’s update.

Breville’s revenues increased 28.8% to $711.0 million for the half while net profit after tax grew 29.25% to $64.2 million. The company noted that assuming no significant change in economic conditions in its major trading markets, it expects FY21 EBIT to be approximately $136 million. This represents an increase of 34.8% on FY20 EBIT guidance and is also higher than the FY21 guidance of $128 million to $132 million provided at its November AGM. 

Morgans retained a $33.90 share price target, around 27% higher than the current Breville share price.

4. Lovisa Holdings Ltd (ASX: LOV) 

The Lovisa share price surged 19% on the back of the company’s half-year results. But while the other ASX retail shares mentioned here delivered double-digit, and in some cases triple-digit, growth across the board, Lovisa was significantly impacted by worldwide store lockdowns. 

As a result, Lovisa’s revenue took a 9.8% hit while net profit after tax slumped 22.6%. Despite a weak performance at face value, Morgans is bullish on the company’s reopening leverage and believes it could see an uplift in growth in the short term. 

The company’s results noted that the first seven weeks of the second half has seen a strong performance from the Southern Hemisphere markets and challenging trading conditions in the Northern Hemisphere, with comparable store sales up 12% overall. 

Morgans retained a target price of $17.95, a 29% premium to the current Lovisa share price.

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

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia has recommended ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 4 ASX retail shares that Morgans thinks are 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!