What recession? 2 retail ASX shares ready to bust out: expert

Investors are understandably wary of ASX shares involved in the retail sector, for good reasons.

The negative effect of seven consecutive interest rate rises will soon start to bite Australian households, as there is often a lag after rate rises before consumers start closing their wallets.

And if Australians have less disposable income, they’re not going to get out to the shops and go nuts on buying non-staple items.

However, there are some exceptions.

Due to the nature of their operating model or the actual product or service they provide, some retail businesses are more resistant to economic downturns.

Here are two such examples of ASX shares experts rated as buys this week:

Riding the recent stock price momentum

For Sequoia Wealth Management senior wealth manager Peter Day, Super Retail Group Ltd (ASX: SUL) ticks many boxes.

“Company brands include Supercheap Auto, rebel, BCF and Macpac. The latest trading update showed a positive start in the first 16 weeks of fiscal year 2023.”

Management was understandably conservative in its outlook in the current environment, but Day is more bullish than that.

“We remain positive about the company’s resilience. Share price momentum has been to the upside between early October and November 3.”

Indeed the Super Retail share price has soared almost 16% since 3 October. Helping Day’s buy case is a tidy 7% dividend yield.

While the stock is a buy for the team at Sequoia, other professionals aren’t wholly convinced.

According to CMC Markets, eight out of 16 analysts currently rate Super Retail as a hold. Six recommend it as a strong buy.

Shares going for an attractive discount

Spotee Connect chief Chris Batchelor reckons JB Hi-Fi Limited (ASX: JBH) operates “a successful business” in consumer electronics retail.

The share price has admittedly dipped 11% year to date, but he’s convinced that’s merely a buying opportunity for long-term investment.

“Revenue has increased at a compound average annual rate of 11.4% for the past 10 years.”

Despite the economic worries, the discount in the valuation is making JB Hi-Fi a compelling buy.

“The market is concerned about economic headwinds dampening consumer demand — but we believe a share price at low $40 levels represents good value.”

JB Hi-Fi shares closed Tuesday at $43.33.

The post What recession? 2 retail ASX shares ready to bust out: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended JB Hi-Fi Limited. 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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