ARB, CTD, NCK - Three ASX consumer stocks to explore in March

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Highlights

  • Consumer discretionary represents all non-essential goods or services that are desirable but not primary for consumers in a particular economy.
  • Australian retail turnover edged up 1.8% in January 2022 amidst the current buoyant economic momentum and increased consumer activity.
  • Consumer discretionary stocks ARB, CTD and NCK registered strong revenue growth in the first half of FY22.

The improving economic scenario following the relaxation of COVID-19 restrictions has led to an uptake in consumer discretionary spending across different categories.

Australian retail turnover edged up 1.8% in January 2022 following a 4.4% fall in December 2021 amidst Omicron concerns. Moreover, sales momentum in Australian stores remained upbeat in October and November 2021 despite supply chain challenges, indicating growing demand in the consumer discretionary sector. 

ALSO READ: Strong demand pushes Australia’s GDP growth to 3.4% in Dec 2021 Qtr

Consumer discretionary represents all non-essential goods or services that are desirable but not primary for consumers in a particular economy. As a result, they are often used to gauge economic conditions and identify the market movement in terms of consumption. Growing economy marked by fair wages and low unemployment rates tend to exhibit robust demand for consumer discretionary goods.

Amidst the current buoyant economic momentum post COVID-19 lockdowns and encouraging retail data, many investors are eyeing attractive stocks to boost their investment portfolio.

ALSO READ: ABS update: Australia sees robust investor lending in January

Let us look at three ASX-listed consumer discretionary stocks with positive one-year returns. Moreover, these companies have registered strong revenue growth in the half-year ended December 2021.

ARB Corporation Limited (ASX: ARB)

ARB Corporation is a leading manufacturer and distributor of aftermarket 4WD (four-wheel drive) accessories in Australia. The Company’s sales revenue stood at AU$359 million for the first half of FY22 ended 31 December 2021, representing 26.5% growth over the previous corresponding period (pcp).

The Company has announced an interim fully franked dividend of 39 cps for the reported period compared with 29 cps fully franked last year. The figure leads to a modest increase in the dividend payout ratio to 46% compared with 43% last year.

ARB maintains a positive outlook, driven by a strong customer order book and improved inventory levels. The Company continues to develop and pursue its exciting long-term growth opportunities.

ALSO READ: Five consumer trends that can emerge in 2022

Corporate Travel Management Limited (ASX: CTD)

Corporate Travel Management registered a 120% increase in revenue to AU$163 million in H1. The global corporate travel manager reported underlying EBITDA of AU$18.2 million in the first half of FY22 despite impacts of the Delta and Omicron variants of COVID-19. The Company’s strategic acquisitions during the pandemic have offered greater exposure to the North American market, rebounding sharply along with the UK market.

CTD is advancing well with the proposed acquisition of corporate and entertainment travel business of Helloworld Travel Limited (ASX:HLO) in Australia and New Zealand.

The strong financial position and expanded global footprint positions Corporate Travel Management well to target EBITDA of AU$265 million in full recovery compared with AU$150 million pre-pandemic.

Related Read: FLT, HLO, CTD - 3 ASX Travel stocks to watch while Australia reopens

Nick Scali Limited (ASX: NCK)

Furniture retailer Nick Scali’s revenue for the half-year ended 31 December 2021 was AU$180.3 million, up 5.4% over pcp. Meanwhile, the Group’s net profit after tax of AU$35.6 million was up 75% when compared to H1 FY20.

The Company’s board has declared a fully franked interim dividend of 35.0 cps, which represents a payout ratio of 85%, up from 80% in H1 FY21.

The Group saw a marked improvement in traffic and sales orders towards January 2022 end as consumers adjusted to managing the pandemic.   

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