Goldman Sachs has upgraded Super Retail Group Ltd (ASX; SUL) to a buy based on its acquisition of Macpac and recent trading and strategy update. Goldman has increased the forecast earnings for FY19 for the company by 13%, supported also by the "simplification of the retail strategy, solid valuation support and a robust macro backdrop for the Australian consumer."
Super Retail specialises in retailing of Auto, Leisure and Sports' products across Australia, with seven retail brands across 634 retails stores.
Super Retail is trading on a forward price-earnings-ratio (PER) of 12x, below the Retail sector median PER of 14x, paying an annual 6% fully franked dividend. Goldman sees upside in the share price to $9.45, which is a rise of 11% from the current price $8.45 at the time of writing.
The key risks include online and international competition.
Bapcorp Ltd (ASX: BAP), which focuses on the distribution of automotive aftermarket parts, is trading on a forward PER of 28x.
