Insights

The retailer that’s a ‘recession-proof’ ASX share to buy: analyst

Australians now have far less to spend with the mortgage taking up more of their budget. So which retail business could still thrive?
The post The retailer that’s a ‘recession-proof’ ASX share to buy: analyst appeared first on The Motley Fool Australia. –

With interest rates rising rapidly and an economic downturn expected to follow, the retail sector is somewhat on the nose with ASX investors at the moment.

But one analyst reckons he’s found a retailer stock to pick up now that can withstand plummeting consumer confidence.

Lovisa Holdings Ltd (ASX: LOV)’s a buy for us,” said senior analyst Shaun Weick in a Wilson Asset Management video.

“We think this one’s a diamond in the rough.”

Weick admitted his team is “cautious” on the retailer stocks because of the gloomy economic outlook.

“But we think fast fashion jewellery is largely recession-proof.”

The share price for Lovisa has lost around 11% so far this year. It does pay out a handy dividend yield of 3.1%, according to Google Finance.

Lovisa’s expansion strategy

According to Weick, the company is banking on new store rollouts to fuel future growth. 

“We can see capacity for this business to more than triple its current footprint,” he said.

“They’ve opened up five new markets recently. And if we look at management’s LTIs [long-term incentives], they suggest that there’s significant upside to consensus earnings expectations.”

Lovisa is scheduled to report its preliminary numbers on 24 August.

Other professionals also share Weick’s enthusiasm for the jewellery retailer. Eight out of 10 analysts surveyed on CMC Markets currently rate Lovisa as a strong buy.

And just last week, The Motley Fool reported that Morgans analysts thought Lovisa could end up as “one of the biggest success stories in Australian retail”.

That team thought the dividend could grow immensely in the future from international expansion.

“We do not think there is any lack of opportunity,” a Morgans memo read.

“In the US, for example, Lovisa now has 81 stores, representing 0.25 stores for every million people, compared to Australia with 158 stores, [which is] 6.15 stores for every million people.”

The Motley Fool’s James Mickleboro reported that Morgans has a buy rating and a $21.50 price target.

The Lovisa share price closed Thursday at $17.62.

The post The retailer that’s a ‘recession-proof’ ASX share to buy: analyst appeared first on The Motley Fool Australia.

Wondering where you should 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 over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

Experts name 2 ASX growth shares to buy
Experts say these ASX dividend shares are buys right now
Experts name 2 ASX growth shares to buy with double-digit upside potential
Own Lovisa shares? Why this broker believes the retailer could be a ‘global force’
Here are 3 excellent ASX growth shares for investors to buy in July

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Lovisa Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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.

  • This field is for validation purposes and should be left unchanged.

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

Share With Your Friends

Rebate Rewards

Level 2 Rebate

Deposit $2,000 and get $200 Rebate
$ 200 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $2,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $200 Rebate
Popular

Level 1 Rebate

Deposit $1,000 and get $100 Rebate
$ 100 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $1,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $100 Rebate

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, 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.

EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here To Get Started
EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here For More Info