Could ASX retail shares be the best shares to own right now as retail sales jump and consumer confidence hits 10-year highs?
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The Australian economy has shown further signs of recovery as its retail sector bounces back to pre-COVID levels.
October retail trade estimates of turnover and volumes for retail businesses, including store and online sales, rose 1.4% month-on-month or 7.1% higher compared to October 2019. The resilience and recent strength of retailers has drawn a series of broker upgrades. Here are the ASX200 shares that have been upgraded this week.
Harvey Norman Holdings Limited (ASX: HVN)
Credit Suisse raised its Harvey Norman share price target from $5.06 to $5.30 with an outperform rating. This represents a 16% upside to its closing price on Wednesday of $4.570. The broker predicts that the work from home trend will stick and provide further upside potential to earnings.
More recently, on 25 November, Harvey Norman updated the market with its year-to-date profit and sales figures. Its aggregated sales revenue increased 28.2% for the period from 1 July 2020 to 21 November 2020 when compared to the prior corresponding period. Similarly, its unaudited preliminary profit before tax for the period 1 July 2020 to 31 October 2020 had jumped more than 160.1%.
JB Hi-Fi Limited (ASX: JBH)
Similarly, Credit Suisse also upgraded its JB Hi-Fi rating from neutral to outperform, and share price target from $50.62 to $53.02. The price target is just below the JB Hi-Fi’s previous record all-time high of $52.99 set in early October.
The broker was pleased with the company’s strong balance sheet and low debt levels. Credit Suisse anticipates the work from home trend to continue and support earnings growth.
Michael Hill International Ltd (ASX: MHJ)
The Michael Hill share price jumped almost 20% last Thursday after a strong first quarter update. This update highlighted strong same store sales growth of 7.9% for the 22 week period ended 29 November 2020. As such, all markets achieved a significant lift in sales, resulting in online sales increasing 110% for the 22-week period.
Despite the temporary store closures and ongoing foot traffic impacts on the key Christmas trading period, the company currently expects to deliver an EBIT result for first-half FY21 to materially exceed the prior year half one result.
The update exceeded Citi’s expectations and the broker raised its price target from $0.50 to $0.620 with a neutral rating. This represents a 6.8% upside to its closing price on Thursday of $0.580.
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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post Could ASX retail shares be the best ASX shares to own right now? appeared first on The Motley Fool Australia.