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Would MM buy Lovisa (LOV) at current levels?

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Question asked 27/05/2023

Would MM buy Lovisa (LOV) at current levels?

Hi James, I'd love to at some point increase my exposure to retailers - I know a lot of them are trading at very low P/Es and also a lot are coming off their tops this week - do you think this is presenting a good opportunity? If so, who would you have your eye on? I know MM already owns LOV but what are your thoughts on some of the others like JBH or PMV or would you get into LOV now its come off its highs if we don't have any exposure? Obviously understand this is general advice. Thanks for your commentary as always.

Answer

Hi Josh,

We addressed 3 retailers in Thursday’s AM report where we had no interest in Harvey Norman (HVN) but liked Eagers Automotive (APE) around $11 and Lovisa (LOV) into weakness closer to $20 – the latter two being around 10% lower. We don’t actually own LOV at this point, we sold back in November ~$24 however we do currently own PMV in the Emerging Companies Portfolio.

With fears of a recession growing and the Australian consumer under pressure from rising mortgage rates/rents we remain cautious toward the sector but JB Hi-Fi (JBH) under $40 and Premier Investments (PMV) around $21 will be offering a compelling valuation story, again close to 10% lower.

In conclusion we do like retail Sector into further weakness but we intend to remain very fussy on entry.

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Lovisa Holdings Ltd (LOV)

LAST UPDATED 25/05/2023 12:03

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