The Super Retail Group Ltd (ASX: SUL) share price could be a bargain right now, in my view.
Shares in the Aussie retailer fell 4.8% lower yesterday to $7.80 per share. It was far from the only ASX 200 share falling lower as the S&P/ASX 200 Index (ASX: XJO) closed down 0.5% at 6,001.60 points.
So, after a big share price fall, is Super Retail worth a look right now?
Why the Super Retail share price fell lower
I think the main cause for concern is the rising coronavirus cases across Australia. The pandemic continues to spread in Victoria and somewhat in New South Wales as well.
That could spell trouble for the Aussie economy and lead to tightening restrictions. In turn, a reduction in foot traffic and potentially discretionary income could hit the retail sector hard.
These fears saw investors head for safety on Monday, which pushed the Super Retail share price lower.
Why the Aussie retailer could be a strong buy
There’s no denying there could be some impact on retailers from tightening restrictions a second time round. However, that was also the case in March when the ASX 200 entered a bear market.
But Super Retail has been relatively resilient in the face of these challenges. In fact, after bottoming out at $2.99 per share in March, the Super Retail share price has rocketed 160% higher since then to $7.80 per share. That’s on the back of strong earnings from Super Retail’s online channels, in particular a surge in sales from its Supercheap Auto and Rebel Sport brands.
I don’t see any reason why that trend can’t continue if we see another lockdown. Yes, there will be some customers who have already bought what they needed. But a targeted strategy towards boosting online sales could pay dividends for the Super Retail share price and the group’s investors.
On top of that, shares in the Aussie retailer are now down 25.3% from their 52-week high. That could mean that now is the chance to snap up a bargain.
Leading fundie Paul Xiradis from fund manager Ausbil holds a similar view. According to a recent client memo from Mr Xiradis, Ausbil’s base case for Super Retail is for a quick recovery.
That represents a bullish scenario that could see the Super Retail share price and others like JB Hi-Fi Limited (ASX: JBH) outperform in 2020.
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More reading
- Down 5% in 1 day: Are Bendigo and Adelaide Bank shares a buy?
- 3 investing strategies to profit from a second ASX share market crash in 2020
- 5 things to watch on the ASX 200 on Tuesday
- Where to invest $5,000 into ASX shares right now
- Market close: ASX 200 falls 0.5%
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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