Australian retail shares have had a pretty rough year, and today isn’t doing much to change that.

The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) is down 0.4% to 3,477 points in late morning trade.

This means the sector has now fallen almost 13% in 2026 and 23% over the past year.

It just shows how quickly sentiment towards retail stocks has changed this year.

And Morgan Stanley still sees plenty to worry about from here.

Why is Morgan Stanley still cautious?

According to The Australian, Morgan Stanley has taken another look at the retail sector following the latest reporting season.

And the broker is still cautious about FY27, even after the falls we’ve already seen across retail stocks.

Analyst Melinda Baxter and her colleagues said “discretionary stocks have de-rated, but earnings risks remain”.

Consumer spending held up better than Morgan Stanley expected through FY26, but the broker still sees some risks ahead for households.

There are a few reasons for that.

The RBA has lifted the cash rate 3 times this year, taking it to 4.35%.

Many mortgage holders are now paying more on their loans than they were at the start of 2026.

Consumer confidence has taken another hit as well.

The Westpac-Melbourne Institute Consumer Sentiment Index fell 5.2% to 84.4 in September.

Westpac said petrol prices had moved back above $2 a litre, while concerns about another RBA rate hike were weighing on households.

The housing market has also started going backwards.

National home prices fell 0.2% in August, marking a fifth consecutive monthly decline from their March peak.

Morgan Stanley thinks all of this could make shoppers a little more careful about where they spend their money.

The broker expects consumers to focus more on value, replacement purchases and promotions as household budgets get tighter.

Which ASX shares does Morgan Stanley prefer?

Morgan Stanley isn’t negative on every retailer, but it has still cut price targets across its discretionary retail coverage.

Wesfarmers Ltd (ASX: WES) was one of the few stocks to get some good news.

The Bunnings and Kmart owner was upgraded from underweight to equal-weight, with Morgan Stanley pointing to its more stable margins.

Wesfarmers shares are up 0.39% to $73.15 today.

Harvey Norman Holdings Ltd (ASX: HVN) went the other way.

Morgan Stanley downgraded the stock from equal-weight to underweight, pointing to its franchise model and exposure to the housing market.

Harvey Norman shares are down 0.96% to $4.13 in Friday trade.

The broker also remains cautious on JB Hi-Fi Ltd (ASX: JBH) and Super Retail Group Ltd (ASX: SUL).

Morgan Stanley has kept both stocks at underweight, with the shares trading at $65.77 and $12.37, respectively.

The post ASX retail shares are down 13% in 2026. Here’s what Morgan Stanley is worried about appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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 and Wesfarmers. The Motley Fool Australia has positions in and has recommended Harvey Norman and Super Retail Group. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you bought Xero Ltd (ASX: XRO) shares back on 6 January 2023, and opted to sell those shares on 20 June 2025, you would have booked a tidy 170.6% gain.

But if you’d instead bought shares in the S&P/ASX 200 Index (ASX: XJO) business and accounting software provider on 20 June 2025, and decided to sell them today, you’d be nursing a loss of 66.5%.

And Xero shares don’t pay dividends, so there’s no passive income relief there.

Which brings us to booming ASX tech stock SKS Technologies Group Ltd (ASX: SKS).

SKS Technologies designs and installs electrical, audiovisual and communications networking systems into the data centre, government and corporate sectors. And the rapid rollout of AI technology has helped send the ASX tech stock soaring.

Currently trading for $8.34 a share, the SKS Technologies share price is up a whopping 143.2% since this time last year, smashing the 1.1% 12-month loss posted by the All Ordinaries Index (ASX: XAO).

And, unlike Xero shares, SKS paid two fully franked dividends over the last year, totalling 10 cents a share. This sees the ASX tech stock trading on a fully franked trailing dividend yield of 1.2%. That equates to a grossed-up yield of 1.7%, once we take those franking credits into account.

Why the ASX tech stock looks like a better buy than Xero shares

The team at Canaccord Genuity believe SKS Technologies can continue to outperform in the months ahead.

In a bullish note addressing the company’s growth, released in August, the broker said:

Going into FY27, we expect further scale benefits and see the 2H margin of +12% as maintainable even when accounting for the fact that each additional staff member could be less efficient than their current staff base.

We also think SKS realises genuine efficiency benefits as contracts scale, which should limit margins retracting and instead provide upside potential to our estimates over time.

Canaccord has a buy rating on the ASX All Ords tech stock with a price target of $10.30 a share.

That represents a potential upside of 23.5% from the current share price. And it doesn’t include any upcoming dividends.

What did SKS Technologies report for FY 2026?

SKS Technologies released its FY 2026 results on 18 August.

Highlights included a 33.0% year-on-year increase in revenue to $347.93 million. And earnings before interest, taxes, depreciation and amortisation (EBITDA) were up 80.8% to $42.4 million.

Comparing that to Xero shares, Xero reported a 31% year-on-year increase in revenue to $2.75 billion, while EBITDA of $757.4 million was up 18%.

On the bottom line, SKS achieved a 93.2% increase in net profit after tax (NPAT) to $27.11 million.

Due to its Melio acquisition costs, Xero’s FY 2026 NPAT of $167.4 million was down 27% from the prior year.

The post Forget Xero shares! Broker tips this top ASX tech stock for 24% gains appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Sks Technologies Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Analysts from Macquarie are soon to tour Nickel Industries Ltd (ASX: NIC)’s Indonesian operations, but have issued a positive research note on the company ahead of the visit.

Strong first half of the year

Nickel Industries last month reported a strong financial result for its first half, with revenue up 13.1% to US$938.4 million and net profit up 365.8% to US$52.5 million.

The company has hit a minor barrier since then, as the ramp-up of its Excelsior Nickel Cobalt HPAL project (ENC) has been interrupted by dry conditions in Central Sulawesi, Indonesia, which have constrained water supply to the operation.

But the company is expecting normal operations to resume with the onset of the wet season by December.

The company said re the ENC operations:

Prior to the onset of the dry conditions, ENC had ramped up to approximately 50% of nameplate capacity within four weeks of the commencement of commissioning. Should the water supply constraints persist, ENC is expected to operate at approximately 30% of nameplate capacity until water availability normalises.

Nickel Industries said its Hengjaya mine, conversely, had been performing well, with record monthly nickel sales of 1.6 million tonnes in August.

Managing Director Justin Werner said re the update:

ENC has performed exceptionally well since commissioning, reaching approximately 50% of nameplate capacity within four weeks, which is a genuine credit to our operating team. The dry conditions in Central Sulawesi are an unusual and temporary constraint on water supply, and we expect availability to normalise with the onset of the wet season. Combined July and August Adjusted EBITDA from operations of approximately US$90 million demonstrates the earnings capacity of the broader business.

Nickel Industries shares looking cheap

Macquarie said in its research note that a planned slurry pipeline “between Hengjaya Mine and ENC could reduce unit costs by replacing truck haulage of limonite ore, with these savings not reflected in our forecasts”.

They added:

Given elevated diesel prices, the magnitude and timing of cost savings could be a focus during the site visit. At the HPAL operations, rising sulphur prices are emerging as a cost headwind as low-cost inventory is depleted, although this is currently offset by strong cobalt revenues. Quantifying sensitivity to both could also be a key focus.

Macquarie said the company had established a “meaningful battery minerals portfolio”.

The broker said they expected dividend payments to resume, with dividend yields of 1.2% in CY26 and 4.1% in CY27 forecast.

Macquarie has a share price forecast of $1.25 on Nickel Industries compared to 79.25 cents currently.

The post This ASX nickel miner could jump 57%, Macquarie says appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Cameron England 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 Macquarie Group. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.