Yesterday we saw Harvey Norman guide to FY23 profits that were largely inline with the markets expectations when taking into consideration their higher property revaluations (+$119m) which continue to defy gravity – how do you do it Gerry! That, along with better inflation numbers saw the retail sector storm higher, and we now pose the obvious question, has the sector seen the lows?
Our preferred pick of the Retail Sector is Super Retail (SUL) given their diverse brand network playing into a broader group of consumers. SUL has corrected -23% from its recent 2023 high as the operator of stores such as Super Cheap Auto, Rebel and BCF has fared far better than many others in the space. While it is not overly cheap (11.8x), a fully franked yield in excess of 7% certainly helps the investment thesis.
We are warming to the discretionary retail sector, however, we want to see FY23 results before backing the sector too heavily.
- We like SUL around $11 but would want the room to average below $10.
MM is cautiously bullish SUL around $11
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