The share market has been under pressure in recent weeks, with volatility and selloffs rattling investors and sending many high quality ASX stocks tumbling.
While that might sound like bad news on the surface, it actually presents long-term investors with some compelling opportunities.
After all, as history has shown time and again, buying great businesses when others are fearful can be a powerful wealth-building strategy.
One ASX stock that appears to fall into that category is Lovisa Holdings Ltd (ASX: LOV).
The fashion jewellery retailer's shares have sunk 33% from their 52-week high of $38.29 and are currently changing hands for $25.42.
But rather than run from the fallen star, now might be the time to consider adding it to a diversified portfolio.
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Why this ASX stock could be a long-term winner
Lovisa is a fast-fashion jewellery retailer with a vertically integrated model and an ambitious global store rollout strategy. It is targeting fashion-conscious women and is already present in several key markets including Australia, the United States, and Europe.
While the company has felt the sting of higher costs and moderating comparable store sales growth, it is still expanding rapidly and lifting its sales in the process. In fact, Bell Potter notes the company is on course to reach 1,000 stores in the very near future.
It is for this reason that the broker is feeling very bullish about the ASX stock and is tipping it as a buy. It recently said:
We continue see catalysts in both new stores and LFL sales ahead considering the notable recovery into 2H25, higher 2H skew in Americas and healthy new openings in broader Europe (ex-UK/France/Germany). The stock continues to trade at a P/E of sub-30x on a 12-month forward basis (BPe) and we see valuation support.
Bell Potter has a buy rating and $30.00 price target on Lovisa's shares. This implies potential upside of 18% for investors over the next 12 months.
Macquarie is bullish too
It isn't just Bell Potter that is bullish on Lovisa. The team at Macquarie is also feeling very positive about the ASX stock.
It highlights its strong like-for-like sales momentum in the early part of the second half and expects its margin expansion to persist. In addition, the broker sees the company's succession planning as a chance to improve cost structures and drive margin expansion. It said:
We continue to expect strong store roll-outs across several markets, with the ability to grow revenue per store. The succession of the current CEO should lead to significant cost savings, and we expect EBIT margin expansion as a result.
Macquarie has an outperform rating and $33.40 price target on Lovisa's shares. This suggests that upside of 31% is possible for investors from current levels.
