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InvestingPro breakdown: 2 retailers with strong upside potential

By Oliver GrayMarket OverviewJun 05, 2023 15:26

au.investing.com/analysis/investingpro-breakdown-2-retailers-with-strong-upside-potential-200568669

By Oliver Gray | Jun 05, 2023 15:26

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Investing.com - The global economy continues to struggle with persistently high inflation pressures and expectations of further hikes from central bank policymakers. Despite an AI-fueled tech stock melt-up and resilient labor markets, there are growing predictions for a recession in H2 2023 as tightening financial conditions drive slowing growth.

Meanwhile, the ongoing conflict in Ukraine continues to significantly impact global macroeconomic and geopolitical environments, including increased volatility in capital and commodity markets, rapid changes to regulatory conditions around the globe including the use of sanctions, operational challenges for multinational corporations, inflationary pressures, and an increased risk of cybersecurity incidents.

With this macroeconomic backdrop in mind, here are 2 companies with the potential to outperform current market conditions according to InvestingPro.

Harvey Norman Holdings Ltd (ASX:HVN)

What Does the Company Do?

Harvey Norman is a prominent Australian-based multinational retailer specializing in furniture, bedding, computers, communications, and consumer electrical products. Operating primarily as a franchise, it is owned by Harvey Norman Holdings Limited, an ASX-listed company. The company functions as a franchisor, offering a wide range of products, investing in property, leasing premises, managing media placement, providing consumer finance, and offering commercial loans and advances.

With Harvey Norman Holdings Ltd (ASX:HVN) down 14.5% over the past year, its discounted price provides investors with a strong upside potential considering its strong dividend yield of 9.1%, as well as growing return on invested capital:

HVN ROIC

Source: InvestingPro

Fair Value Estimate

Currently, the stock is trading at A$3.39, while the average of 15 Fair Value Investing Models revealed a price target of $4.71, indicating an upside of 38.8%.

HVN FV

Source: InvestingPro

JB Hi-Fi Ltd (ASX:JBH)

What Does the Company Do?

JB Hi-Fi Limited is a specialty retailer of home consumer products, focusing on consumer electronics, software, whitegoods, and appliances. With over 300 stores across Australia and New Zealand, the company offers a wide range of products at competitive prices, supported by knowledgeable staff. They operate various store types, including an online presence, and also provide informational technology and consulting services.

Weekly price action for JB Hi-Fi Ltd (ASX:JBH) shows that the company is trading just above yearly support levels and is vulnerable to further breakdown in the event of a global downturn:

JBH weekly

Source: Investing.com

Despite these risks, the company has maintained an average revenue growth of 10.6% since 2018, posting record earnings for Q2 2023 as post-covid normalization boosted sales in the face of slowing consumer spending and rising inflation.

Rev. Growth

Source: InvestingPro

Fair Value Estimate

Currently, the stock is trading at A$43.22, while the average of 15 Fair Value Investing Models revealed a price target of $58.25, indicating an upside of 34.6%.

JBH FV

This analysis was done using InvestingPro, access the tool by clicking on the image.

Find All the Info you Need on InvestingPro!

Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counseling or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky, and therefore, any investment decision and the associated risk remains with the investor.

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S&P/ASX 200	7,048.60	+23.80	+0.34%
ASX 200 Futures	7,048.5	-3.5	-0.05%
ASX All Ordinaries	7,249.70	+27.20	+0.38%
US 500	4,292.9	-6.8	-0.16%
Dow Jones	33,507.50	-158.84	-0.47%
China A50 Futures	12,499.0	-99.0	-0.79%
Dollar Index	105.860	-0.073	-0.07%

Crude Oil WTI	90.77	-0.94	-1.02%
Natural Gas	2.930	-0.015	-0.51%
Gold	1,864.60	-14.00	-0.75%
Silver	22.390	-0.351	-1.54%
Copper	3.7340	+0.0260	+0.70%
US Sugar #11	26.52	-0.44	-1.63%
US Coffee C	145.23	-1.97	-1.34%

Australia 10Y	4.474	-0.016	-0.36%
Australia 5Y	4.157	-0.006	-0.14%
New Zealand 10Y	5.385	+0.045	+0.85%
U.S. 10Y	4.579	+0.008	+0.18%
Japan 10Y	0.749	-0.021	-2.79%
China 10Y	2.706	-0.009	-0.33%
Singapore 10Y	3.405	0.015	0.44%

CSL	250.80	-1.24	-0.49%
Woolworths	37.320	+0.050	+0.13%
ANZ Holdings	25.660	+0.180	+0.71%
Commonwealth Bank Australia	99.970	+0.020	+0.02%
Telstra Group	3.850	0.000	0.00%
National Australia Bank	29.070	+0.190	+0.66%
BHP Group Ltd	44.250	+0.520	+1.19%

	Interest Rates	Next Meeting
RBA	4.10%	Oct 03, 2023
BOE	5.25%	Nov 02, 2023
ECB	4.50%	Oct 26, 2023
FED	5.50%	Nov 01, 2023
SNB	1.75%	Dec 14, 2023
BOC	5.00%	Oct 25, 2023
RBNZ	5.50%	Oct 04, 2023
BOJ	-0.10%	Oct 31, 2023
CBR	13.00%	Oct 27, 2023
RBI	6.50%	Oct 06, 2023
PBOC	3.45%
BCB	12.75%	Nov 01, 2023

InvestingPro breakdown: 2 retailers with strong upside potential

Harvey Norman Holdings Ltd (ASX:HVN)

Fair Value Estimate

JB Hi-Fi Ltd (ASX:JBH)

Fair Value Estimate

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