The latest ANZ-Roy Morgan Consumer Confidence reading is out and the results are reasonably positive. In the week ending June 22 confidence rose 2.4% to 105.7. Gains of around 6% have now been recorded over the past month which is particularly pleasing in light of the sharp fall experienced post-Federal budget. However despite these gains, consumer confidence still remains 10% below its pre-budget highs and around 7% below its long-term average.
Commenting on the results, the ANZ stated it, "now forecasts household consumption growth to remain moderate this year, before improving next year as the non-mining recovery gathers momentum."
Predicting the exact timing of a sustained rebound in consumer sentiment and likewise a sustained rebound in investor sentiment for consumer discretionary retail stocks is not easy, however for patient, long-term investors timing is not key. Rather, the time to consider adding any stock to your portfolio is when they are selling at a discount to fair value, it is then simply a matter of waiting for the market to wake up to the fact.
Here are three retail stocks which are all selling towards their 52-week lows and could be worth keeping a close eye on.
The shares of department store operator Myer Holdings Ltd (ASX: MYR) continue to struggle despite its closest rival David Jones Limited (ASX: DJS) having received a takeover offer which highlights the value an industry buyer will place on businesses within the sector. The takeover offer has led to extremely different share price performances for these two stocks.
So far this calendar year the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has gained just 1.4%, while David Jones has soared 30.5% and Myer has sunk 23%! With a forecast financial year (FY) 2015 price-to-earnings (PE) ratio and fully franked dividend yield of 10.6x and 7.4% respectively, it's hard not to see the appeal of Myer.
JB Hi-Fi Limited (ASX: JBH) has a greater growth profile than Myer and this is reflected in its higher pricing. The share price is down 16% this calendar year and based on FY 2015 Morningstar consensus forecasts the stock is trading on a PE of 13.4x and a fully franked yield of 4.6%.
Of the three stock suggestions listed here arguably the one with the most sustainable competitive advantage is Super Retail Group Ltd (ASX: SUL), thanks to its niche operating segments in auto care, boating, fishing, outdoors and sports. The stock has fallen nearly 37% this calendar year. According to consensus forecasts it is selling on a PE of 14 and a fully franked yield of 4.6%.
