Consumer discretionary stocks have been sold off right across the board on the expectation that a recession will curtail discretionary spending, however, as highlighted in recent reports we think there is value emerging in some areas, one of those being the low-cost jewellery business, Lovisa (LOV). LOV is in a strong position, looking to double earnings over the coming 12-months through an expanded store footprint in North America and Europe. Their customer base is unlikely to be impacted by higher rates and they may see increased demand as consumers look towards lower-priced offerings for value, while the minimum wage increase will also boost disposable income for their target market. With a market cap of $1.7b, they currently have around 600 stores with plans to add another 100 over the coming year. A recent sales update was positive with strong same-store sales growth and strong margins.
MM is bullish LOV ~$15
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