Investors shopping for good value ASX shares, should browse the retail sector. Many retail shares have dropped steeply in 2022, but now offer significant upside potential over the next 12 months, according to TipRanks insights.
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Even in the face of rising consumer prices and interest rates, recent retail sales reports have shown that Australian shoppers have maintained strong spending. In the broad ranging retail sector, it’s easy for investors to overlook opportunities in niche segments. For investors scouring the market for cheap ASX retail shares, these three specialty retail stocks are worth a look, as they each promise more than 40% upside potential:
Adairs Ltd. (ASX:ADH)
Founded in 1918, Melbourne-based Adairs is a specialty retailer within the home products category, selling everything from furniture to bed items and fragrance products. It operates stores in Australia and New Zealand under the namesake Adairs and Mocka brands.
According to TipRanks’ analyst rating consensus, Adairs stock is a Moderate Buy based on three Buys and four Holds. The average Adairs share price forecast of AU$2.73 implies over 48% upside potential.
Adairs stock is receiving positive mentions on financial blogs. TipRanks data shows that financial blogger opinions are 84% Bullish on ADH, compared to a sector average of 65%.
Michael Hill International Ltd. (ASX:MHJ)
Brisbane-based Michael Hill International is a jewellery retailer that has been in business since 1979. It sells a range of diamond rings, earrings, bracelets, and watches. The retailer operates a multinational business with stores in Australia, New Zealand, and North America. Michael Hill delivered record profit for Fiscal 2022. Its stock currently offers an above-average dividend yield of more than 5%.
According to TipRanks’ analyst rating consensus, Michael Hill International stock is a Strong Buy based on 3 Buys and one Hold. The average Michael Hill share price prediction of AU$1.67 implies over 47% upside potential.
Michael Hill scores a nine out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
City Chic Collective Limited (ASX:CCX)
Sydney-headquartered City Chic Collective is a multinational specialty retailer focused on plus-size women’s clothing, shoes, and accessories. The retailer was founded in 1992. Its brands include its namesake City Chic, Hips & Curves, Fox & Royal, and Avenue.
According to TipRanks’ analyst rating consensus, City Chic Collective stock is a Moderate Buy based on five Buys and three Holds. The average City Chic Collective share price target of AU$2.50 implies over 48% upside potential.
The stock is a favourite of insiders. TipRanks’ Insider Trading Activity tool shows that Insider Confidence Signal is currently Positive on City Chic Collective shares. In the past three months, City Chic Collective directors have purchased AU$172,700 worth of shares in the company.
Final thoughts
TipRanks insights can help investors navigate market uncertainties, to identify the best ASX shares to buy for a long-term portfolio. Based on these insights, Adairs, City Chic Collective, and Michael Hill International stand out as promising specialty retail shares. Amid recession concerns, it is also worth noting that these retailers have been in business for many years and have survived several market downturns.
