Retail trade data released this week by the Australian Bureau of Statistics (ABS) surprised many economists with the strength of its figures. According to the ABS, Australian retail turnover rose 0.7% in June following a rise of 0.4% in May, seasonally adjusted.
It was certainly pleasing news for the Australian economy and also for shareholders in ASX-listed retailers, particularly those exposed to the household goods sector, and the cafes, restaurants and takeaway food sector.
Given the rebound in turnover – no doubt at least partially helped by the generous government stimulus measures introduced in the last Federal Budget – now could be an apt time to review whether your portfolio has enough exposure to retail stocks. Here are a few companies that might be worth considering…
Super Retail Group Ltd (ASX: SUL) – The owner of Ray's Outdoors and Supercheap Auto (amongst others) stands to benefit from increased consumer spending including by small businesses looking to take advantage of the recently implemented accelerated depreciation measures.
The stock is trading on a financial year (FY) 2016 price-to-earnings (PE) ratio of 14.9x and dividend yield of 4.5% (according to data supplied by Morningstar). In comparison, the S&P/ASX 300 (Index: ^AXKO) (ASX: XKO) is trading on a forecast PE of 18.5x and yield of 4.8%.
Harvey Norman Holdings Limited (ASX: HVN) – Offering a range of products including electronics, appliances and furniture, Harvey Norman is well placed to benefit from both the small business tax measures and increased spending on home furnishing on the back of increased volumes of home building and home sales.
Investors can buy Harvey Norman stock today on a forecast FY 2016 PE of 17.9x and yield of 3.6%.
Retail Food Group Limited (ASX: RFG) – As the owner of a wide range of quick service food franchises, Retail Food Group offers investors exposure to the growing turnover being experienced in this sector.
With the share price falling over 20% in the past three months, the stock can currently be purchased on a forecast FY 2016 PE of 12.3x and yield of 6.5%.
