Specialist fashion jewellery retailer Lovisa Holdings Ltd (ASX: LOV) certainly didn’t escape the ravages of COVID-19 lockdowns unscathed.
The Lovisa share price plunged by more than 65% from 21 February through to 20 March last year. But it’s largely been uphill from there, with Lovisa shares having rocketed more than 500% from their 19 March 2020 lows.
Despite declining revenues and profits reported for the first half of the 2021 financial year, the ASX retailer ended the half year with $42.5 million cash in hand. The company also upped its interim dividend to 20 cents per share (cps), having paid 15 cps in H1 FY20.
Why one broker thinks this ASX retail share is a Buy
Speaking with LiveWire, Monash Investors’ Simon Shields said Lovisa shares are a Buy, adding, “It’s a stock we’ve been across for a long time.”
Shields said that Lovisa’s global rollout strategy is “very important”.
But we’re very confident in the rollout. When you look at the penetration in Australia and look at the lack of penetration in some of the other markets where it’s growing very quickly. And the fact that it can get its hands on quite a large store network very quickly like it did in Europe, these opportunities do come up from time to time. Every time it opens up a new store, the payback is about a year or less.
Shields went on to say that Lovisa is “a tremendous business, management’s first-class, excellent execution. And when we do our DCF, we get lots and lots of upside.”
DFC, if you’re not familiar, stands for discounted cash flow. It’s a calculation intended to value an investment today based on estimates of its future earnings.
Lovisa share price snapshot
Lovisa shares are gaining today, up 2.54% in late afternoon trade.
So far in 2021, the Lovisa share price has leapt nearly 29% higher. That compares to a 1% gain on the All Ordinaries Index (ASX: XAO).
Lovisa pays an annual dividend yield of 2.4%, 50% franked.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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