The landscape of consumer discretionary stocks is ever evolving, shaped by economic indicators, company performances, and broader market trends. As we wrap up another year, it's crucial to revisit our projections and recommendations based on the latest data. Following the recent Annual General Meetings (AGM) season and shifts in foreign exchange (FX) rates, we've conducted a comprehensive review of our earnings estimates and target prices for companies within the consumer discretionary sector.

Updated Earnings Estimates

On a median basis, our Net Profit After Tax (NPAT) forecasts have been adjusted downwards by 1% for both FY24 and FY25. This adjustment primarily reflects our expectations for lower gross margins and increased operating costs across the board. Despite these reductions, our revised FY24 estimates stand 3% above the Visible Alpha consensus, indicating a slightly more optimistic view compared to the broader market expectations.

Strategic Recommendation Changes

The Reject Shop (ASX:TRS): We've upgraded our recommendation from Hold to Add. This decision reflects our reassessment of the company's growth prospects and its ability to navigate the current market dynamics.

Key Picks in Consumer Discretionary

Lovisa (ASX:LOV): Renowned for its fast-fashion jewelry offerings, Lovisa continues to exhibit robust growth potential, underpinned by aggressive international expansion and resilient consumer demand.

Super Retail Group (ASX:SUL): As a leading retailer catering to outdoor, sports, and auto enthusiasts, Super Retail Group has demonstrated commendable resilience and growth, making it one of our top picks in the sector.

Conclusion

As we navigate through fluctuating market conditions, our updated models reflect a cautious yet opportunistic stance on the consumer discretionary sector. The adjustments to our earnings forecasts and the strategic changes in our stock recommendations aim to capture the evolving landscape and identify opportunities for investors. Lovisa and Super Retail Group, with their distinct market positions and growth strategies, exemplify the potential for outperformance in this dynamic sector.


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News & Insights

We have updated our earnings estimates and target prices for all the companies in our consumer discretionary universe following the trading updates provided during the recent AGM season and recent movements in FX rates.
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