I think investors should be scouring the ASX retail share industry to find opportunities right now.
Why? The ASX retail sector is cyclical – when retail conditions are weak, share prices are sold down, as we've seen multiple times over the past two years. But, when investor and shopper confidence improves, we typically see sizeable share price recoveries.
There's no specific timeframe for a recovery, though, and not every retailer will see the same level of turnaround.
Some stocks' share prices have already jumped during reporting season. These include Temple & Webster Group Ltd (ASX: TPW), Universal Store Holdings Ltd (ASX: UNI), Breville Group Ltd (ASX: BRG), and Super Retail Group Ltd (ASX: SUL).
Here are a few more ASX shares that I believe could be longer-term opportunities at their current prices.
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Time to be brave?
As Warren Buffett once explained, an appealing time for investors is when share prices are low:
If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?
Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.
Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.
It's usually times of uncertainty that create the lowest and best share prices for us to consider buying.
The businesses below are not at rock-bottom prices, but I think they're primed to see earnings growth over the next two or three years, particularly once interest rates start being cut.
Accent Group Ltd (ASX: AX1) is a shoe retailer of various brands across Australia. The Accent share price dropped 15% on Friday (making it better value in my eyes), and the FY24 result included a promising FY25 trading update. In the first seven weeks of FY25, total sales were up 8.7%.
Premier Investments Limited (ASX: PMV) owns several retail brands, including Smiggle, Peter Alexender, Just Jeans, and Jay Jays. It also holds positions in Breville and Myer Holdings Ltd (ASX: MYR). Its global sales could improve as inflation and rate cuts occur in its various international markets, while the planned business separation could unlock value.
Metcash Ltd (ASX: MTS) owns a hardware division that includes various businesses, including Mitre 10, Home Timber & Hardware, Total Tools, Bianco Construction Supplies and Alpine Truss. I think eventual Australian rate cuts — perhaps in 2025 — could spur demand for housing construction, renovations and smaller DIY work, which would help return Metcash to stronger profit growth.
Adairs Ltd (ASX: ADH) is a leading retailer of homewares and furniture across the Adairs, Focus on Furniture and Mocka businesses. I think sales can bounce back in the next two or three years once household budgets are less tight. The homewares company seems priced very cheaply for where its profit could be in FY26, in my opinion.
