Two ASX 300 retail shares are a buy but another may fall slightly, according to analysts at Macquarie.

The broker rates Lovisa Holdings Ltd (ASX: LOV) and Premier Investments Ltd (ASX: PMV) as buys, while City Chic Collective Ltd (ASX: CCX) is rated neutral.

Let’s take a look at the outlook for these three ASX retail shares.

Will retail shares bounce back?

Macquarie analysts have placed an outperform rating on the Lovisa share price with a $27 price target. It also rates Premier Investments as outperform with a $29 price target. Premier Investments has a portfolio of retail brands including Portmans, Just Jeans, and Peter Alexander.

The Macquarie team likes retailers with scale, strong balance sheets, and market-leading brands, with youth consumers well positioned in today’s economic environment, the Australian Financial Review reported.

Lovisa shares fell 0.29% on Tuesday to close at $24.21 each. Macquarie’s price target of $27 implies an upside of 11.5%. In November, Lovisa reported global store sales in the first 19 weeks of FY23 to date were up 16.1% on FY22. The company also reported it had opened 47 new stores.

Premier Investments shares dropped 5.19% on Tuesday to close at $24.85. Macquarie’s price target of $29 implies a 16.7% upside based on the current share price.

In early December, the company reported global sales in the first 17 weeks of 1H23 had soared 24.9% compared to pre-Covid 1H20 sales. The company also reported record sales during the Black Friday trading week.

However, looking at the bigger picture for retail, analysts at Macquarie are concerned about online sales traffic in the current economic environment, commenting (courtesy of AFR):

December website traffic data remains weak as retailers continue to cycle tough COVID comps. Online activity continues to moderate from elevated levels seen over CY20-21.

With this in mind, Macquarie has placed a neutral rating on City Chic Collective with a 42-cent price target, noting the company’s website traffic fell 8.9% in the “first weeks of December”, the publication reported.

City Chic shares fell 3.37% in Tuesday’s trade to close at 43 cents apiece. On 20 December, City Chic reported global year-to-date revenue was down about 7% compared to the prior corresponding period. However, it was up 38% on FY21.

Meanwhile, the latest ANZ-Roy Morgan Consumer Confidence data, released today, shows consumer confidence lifted 4.9 points last week to 87.4. ANZ senior economist Adelaide Timbrell said:

This was the first new year’s jump in confidence since 2018.

Share price snapshot

The Lovisa share price has soared nearly 32% in the last year.

Premier Investments shares have declined 11% in the past 52 weeks.

Citi Chic Collective shares have plunged 91% in the past year.

The post 2 ASX 300 retail shares to buy right now, and one to avoid: Macquarie appeared first on The Motley Fool Australia.

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More reading

• Why Brainchip, IAG, Premier Investments, and Telix shares are sinking today
• 5 things to watch on the ASX 200 on Tuesday
• 2 excellent ASX growth shares that analysts say are buys in January
• Should you buy Premier Investments shares before they trade ex-dividend next week?
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Monica O’Shea 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 Lovisa. The Motley Fool Australia has recommended Lovisa and Premier Investments. 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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Many blue chip companies are trading on what would be considered ‘cheap’ earnings multiples following a tough year for S&P/ASX 200 Index (ASX: XJO) shares.

Nealy 15% of companies included in the Aussie benchmark index now have a price-to-earnings (P/E) ratio below 10. However, one broker is concerned that there is possibly a good reason for the steep discount on a staple of the materials industry.

Holding the title of the second-lowest P/E ratio in the benchmark — at 3.1 times earnings — shares in BlueScope Steel Limited (ASX: BSL) might look like a golden opportunity. Though, the team at Ord Minnett begs to differ based on its forecasts.

Tailwinds fade in a slowing economy

Share market investors and a single-digit P/E ratio can be like moths to a flame. The attraction is in the chance of investing in a company that is potentially mispriced. This strategy falls apart when the underlying fundamentals continue to erode, resulting in what is called a ‘value trap‘.

According to the analysts at Ord Minnett, BlueScope Steel might have the makings of a value trap right now. This is largely based on their estimates that the steel giant will experience significant reductions in its earnings this year and through to FY25.

Specifically, Ord Minnett analysts expect that rising interest rates will squash steel demand. This paired with the absence of monetary stimulus and an easing of supply disruptions will see BlueScope earnings fall off a cliff.

In FY23, the team forecast BlueScope’s earnings before interest and tax (EBIT) to fall from $3.79 billion to $1.6 billion. From there, EBIT is expected to slide further — descending to $1 billion by FY25.

Commenting on the forecasted future direction of BlueScope earnings, the Ord Minnett team wrote:

We do not believe this negative earnings profile is reflected in BlueScope Steel’s stock price, trading at a premium of more than 20 per cent to our fair value estimate.

In December, Fitch Ratings revealed its expectations for metals prices across the world to weaken in 2023. Likewise, a mill source informed S&P Global Commodity Insights of their view of further weakness, stating:

China’s steel demand is likely to continue falling in 2023 due to slowed demand both home and abroad, so the commissioning of these new steel projects will put a lot of pressure on the market trends, if most steel makers do not put their production under control.

Where could this ASX 200 share end up?

The BlueScope Steel share price has already fallen by 18.4% over the last year, but Ord Minnett anticipates further downside.

In light of forecasts for its earnings to more than halve, the team has set its price target on this ASX 200 share to $13 per share. This would suggest there’s still another 26.5% worth of space left for BlueScope to tumble from its current $17.69 position.

The steel giant’s 52-week low is $14.74.

The post Broker reveals ASX 200 share with earnings expected to halve appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• These 3 ASX 200 lithium shares outperformed all others in 2022
• My 3 best ASX shares of 2022 – and why I think they’ll win again in 2023
• Starting 2023 with no savings? I’d follow Warren Buffett and start building wealth

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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It’s been a rather crazy time for the Arafura Rare Earths Ltd (ASX: ARU) share price of late. Back at the start of November, Arafura shares were going for 30 cents each. But by New Year’s Eve, Arafura shares were 47 cents each, up more than 56% from where they were just two months prior.

But let’s talk about the past week. Arafura has been on a bit of a rollercoaster. Just last Thursday, we saw Arafura at 45 cents a share. But Friday saw an astonishing run-up for this company, with Arafuras share climbing more than 13%.

Yesterday, the company rose another 7.8% to hit a new 52-week high of 56 cents per share at one point. Not only was that a new 52-week high, but it was also the highest Arafura share price has been at in more than 10 years. So between 6 and 9 January, Arafura shares climbed more than 22%.

But by the end of today’s trading session, this story added a new, and rather different, chapter. The Arafura share price crashed today, no way around it. The company opened at its new 52-week (and decade) high of 56 cents per share but quickly started falling. By the end of today’s session, Arafura had closed down 9.09% at 50 cents a share.

So what on earth is going on here?

Why has the Arafura share price been on such a wild ride in 2023?

Well, the first thing to note is that there hasn’t been any fresh news out of Arafura. However, the company did announce the results of its share purchase plan last week.

But since then, all we have gotten out of the company has been routine paperwork announcements, mostly concerning this share purchase plan. So we can probably rule this out in explaining the wild volatility we have seen with the company’s shares.

It is worth mentioning that most companies in or around Arafura’s wheelhouse also had pretty awful days today. Lynas Rare Earths Ltd (ASX: LYC) shares fell by a nasty 3.75%. And lithium shares like Core Lithium Ltd (ASX: CXO) and Pilbara Minerals Ltd (ASX: PLS) also fell, with Core Lithium copping a 5% slide.

So perhaps investors, after enjoying such a strong run over 2023 thus far, have chosen today to take their profits off the table en masse. It’s rather unusual for an ASX share to gain 20% over just a couple of days. Investors know this, and it is conceivable that many decided to try and get out rather than see what the next week holds.

This might be the most likely explanation as to why the Arafura Rare Earths share price had such a clanger today. Even so, the company remains up more than 10% in 2023 so far as at today’s closing share price.

The post Arafura share price hits 10-year high then crashes 10%! What’s going on? appeared first on The Motley Fool Australia.

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More reading

• 23 ASX shares to buy in 2023 – brokers
• Arafura Rare Earths share price rebounds strongly after dumping 17% in 5 days
• Why Argosy Minerals, Arafura, Deep Yellow, and Pro Medicus shares are charging higher
• Why did the Arafura Rare Earths share price dive 9% on Tuesday?
• Why Appen, Arafura, Aurizon, and Star shares are sinking today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) broke a four-session winning streak on Tuesday, falling 0.28% to close at 7,131 points.

Most of the ASX 200’s 11 sectors closed lower today, with only the S&P/ASX 200 Communications Index (ASX: XTJ) and the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) posting notable gains. They each rose around 0.2%.

The latter may have been bolstered by new data from the Australian Bureau of Statistics, finding Aussie households’ discretionary spending was 6.3% higher in November 2022 than in the same month of 2021.

Spending on consumer staples also lifted 17.1%, while spending on goods and services lifted 1.2% and 24% respectively.

Meanwhile, the S&P/ASX 200 Energy Index (ASX: XJO) fell 0.3% today despite oil prices rising around 1.3% overnight.

The S&P/ASX 200 Materials Index (ASX: XMJ) also fell 0.5%, weighed down by lithium and gold shares.

Still, there were plenty of gains on the ASX 200 on Tuesday. Let’s look at the top 10.

Top 10 ASX 200 shares countdown

Today’s top-performing ASX 200 share was Boral Limited (ASX: BLD).

It posted a 2.6% gain despite no news having been released by the building products and construction materials provider.

These shares made today’s biggest gains:

ASX-listed company	Share price	Price change
Boral Limited (ASX: BLD)	$3.10	2.65%
Aristocrat Leisure Limited (ASX: ALL)	$32.06	2.2%
Lottery Corporation Ltd (ASX: TLC)	$4.72	1.94%
Carsales.com Ltd (ASX: CAR)	$21.28	1.92%
Domain Holdings Australia Ltd (ASX: DHG)	$2.78	1.83%
ResMed Inc (ASX: RMD)	$30.57	1.7%
Incitec Pivot Ltd (ASX: IPL)	$3.78	1.61%
Lendlease Group (ASX: LLC)	$8.03	1.39%
REA Group Limited (ASX: REA)	$112.83	1.39%
Nanosonics Ltd (ASX: NAN)	$4.43	1.37%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• These 3 ASX 200 lithium shares outperformed all others in 2022
• My 3 best ASX shares of 2022 – and why I think they’ll win again in 2023
• Starting 2023 with no savings? I’d follow Warren Buffett and start building wealth
• Why 2023’s stock market could offer me once-in-a-generation returns

Motley Fool contributor Brooke Cooper 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 Nanosonics and ResMed. The Motley Fool Australia has positions in and has recommended Nanosonics and ResMed. The Motley Fool Australia has recommended Carsales.com and REA Group. 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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