It is time to reveal our best ASX Consumer Stocks for 2024! We will be addressing both discretionary and staple stocks as one in this article as it has been an interesting year for these sectors. Plenty of discretionary stocks took a hit in the early parts of the year as consumer spending declined, although some have since recovered, buoyed by holiday trading. Although plenty of staple stocks haven’t fared that bad, some have seen margin hits due to inflation.
We think 2024 should be a solid year for consumer stocks, but think these 5 in particular will see good years.
The 5 best ASX consumer Stocks for 2024
Light & Wonder (ASX:LNW)
Even if you don’t accept the thesis that inflation in Australia will get under control, this one should still be fine. It is a specialist in gambling applications that are used the world over. It has been listed on the Nasdaq for several years, but only listed on the ASX at the end of May last year. The company opted to list Down Under due to interest from Australian fund managers that could only invest in Australian-listed shares.
There are 12 analysts covering the company – 9 in North America and 3 in Australia. The mean target price is US$137.53 per share, a modest 5% premium. Analysts are expecting $2.9bn in revenue (up 16%) and a $162m profit. Comparison with the previous year is difficult because the core operations notched up a loss but the broader company recorded an enormous profit as it cashed out of non-core assets.
Looking ahead to CY24, analysts expect $3.1bn in revenue (up ~10%) and a $321m profit (nearly double the year before). In CY24, $3.3bn in revenue (up 6%) and a $432m profit (up 35%). The company’s P/E for CY24 is 25.3x. This may seem high for an ASX stock, but not for a US stock. If you believe consensus estimates, it is trading at a PEG of barely 0.3x.
Breville is categorised as a ‘consumer discretionary’, but we think it is fair to say it is less discretionary than some others. This company is a premium kitchen appliances business with a presence in Australia, Europe and the Americas. Breville sells over $1.4bn in goods each year in over 100 countries globally and caters to middle to higher income earners.
Consensus estimates call for 8% revenue growth, 9% EBITDA growth and 10% profit growth in FY24. For FY25, analysts expect 10% revenue and EBITDA growth and 14% profit growth. Where will this come from, investors might ask? From further international expansion as well as the end of the rate hike cycle.
JB Hi-Fi (ASX:JBH)
This company is in a similar category to Breville, in that it serves a market segment where if your product breaks down – you’re going to need a new one. Only thing is, this company specialises in consumer electronics, such as TVs, consoles, computers, mobile phones and white goods.
At its FY23 results, it recorded a 1.8% decline in sales, although this was due to the Good Guys rather than its flagship brand. It made a $479m profit in the period.
Although JB Hi-Fi sales have been flat in the first quarter of FY24 compared to FY23, it was 40.5% up against pre-COVID in Australia and 22% up in New Zealand. Investors should expect a boost from Black Friday and Boxing Day in its 1HY24 results, due in February.
This company is up 25% in the last year, making it one of the best stocks. It has benefited from higher fuel prices, not to mention its status as a staple company and its acquisition of Z Energy. It recorded a ‘Group Replacement Cost Operating Profit (RCOP EBIT)’ of $438.2m, up 65% on the prior corresponding period. Even though refinery production was flat, this company benefited from a 27% jump in the Lytton Refiner Margin. The company has not given guidance for its next annual results, although it has told investors to expect continued strong performance.
Universal Store (ASX:UNI)
Hear us out here. Yes, this casual fashion chain serves millennials who have far less monet than older generations. However, we think it is primed to recover the lost ground over the laat couyple of years provided inflation returns to normal.
In a trading update from last month, it reported 15% sales growth in the first four months of FY24, an underlying gross margin of 59% and an underlying EBIT $2m higher than the prior corresponding period. The company has a CEO in Alice Barbery with skin in the game, as well as a focus on cost control that has helped its cause.
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