The S&P/ASX 200 Index (ASX: XJO) (Index: ^AXJO) has been somewhat buoyant over the past 1 – 2 months. It's held its own, but hasn't made any big moves coming into 2015. That's in contrast to Super Retail Group Ltd (ASX: SUL), the specialty retailer that spent much of 2014 slowly sinking in share price. In December it slipped under $7 a share, more than 50% down from highs in November 2013.
What a change one month can make! Climbing from under $7 to $8.78 currently, something may be changing for the specialty retailer in 2015. Here are four reasons why you should follow Super Retail Group and perhaps pick up shares as things are stirring in the retail industry.
Lower Aussie dollar
Usually a lower Aussie gives exporters and companies with overseas earnings a revenue advantage. However, Super Retail Group could see more customers shopping in store or ordering online because their purchasing power has dropped for overseas ordering with the Aussie now under US$80 cents.
Lower interest rates
With the euro falling to new lows and commodity currency countries like Canada recently cutting rates, the RBA may follow suit and cut the cash target rates below 2.5% soon this year. Whether one cut or two, the extra amount of money left over in consumers' pockets can make its way into retail stores like Super Retail Group's Supercheap Auto, Rebel Sports, BCF and Amart Sports. Other stores like JB Hi-Fi Limited (ASX: JBH) could benefit from this increase in consumer spending as well.
Lower petrol costs
Fuel is one of the biggest monthly expenses families pay, so the recent fall in petrol at the pump is like a government rebate. It may not be a great amount of savings to buy big ticket items like a car, but people could afford cheaper personal items such as sports apparel and equipment or maybe some auto accessories- items that Super Retail Group stores sell.
Also, Super Retail Group can benefit directly from cheap petrol through lower shipping and transportation costs. Lowering company costs can boost earnings.
High yield
Super Retail Group's stock price has rallied strongly from December lows, already up about 30%. Some investors may have missed that juicy bump up in share price, yet they can still take advantage of a healthy 4.6% yield fully franked. The specialty retailer has a good track record of increasing dividends, so there are still opportunities for pleasing future dividend income growth should the company's revenue and earnings rise in 2015.
