Consumer spending is growing, and now may be the perfect time to pick up some retailers that have been beaten down in recent times.
According to data from the Australian Bureau of Statistics, retail spending rose 0.4% in July, although slightly lower than the growth of 0.6% experienced in June. With the unpopular May budget out of the way, consumers may be regaining confidence and going out and spending.
Here's our view on some of the retailers who are likely to do well…
Vita Group Limited (ASX: VTG) operates Telstra Corporation Ltd's (ASX: TLS) retail stores and a number of their business centres. Vita also runs the Next Byte stores which focus on Apple products. According to Pie Funds Management, Vita could pay a special dividend later in the year, is expected to grow earnings by more than 50% and is trading on a prospective P/E ratio of less than 10. Add in the expected surge in sales when the iPhone 6 is released next week, a 4.3% fully franked dividend yield and Vita appears to be a no-brainer.
PAS Group Ltd (ASX: PGR) is a retailer of women's fashion with 235 stores around Australia and brands including Review and Metallicus. At current prices the company is trading on a P/E ratio of around 8.5 times, and is expected to announce its maiden dividend in February 2015. That's cheap when you consider a similar retailer Speciality Fashion Group Ltd (ASX: SFH) trades on a P/E ratio of 13.4,
JB Hi-Fi Limited (ASX: JBH) currently sports a forecast P/E ratio of 12.8x at the current price of $17.22. The consumer electronics retailer also pays a 5% fully franked dividend yield. JB Hi-Fi recently reported that sales are being impacted by a decline in tablet sales, but says it still expects to drive solid sales growth of around 9% this financial year to $3.3 billion, thanks mainly to the opening of several new stores.
