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The share market responded warily to the RBA’s decision to keep the cash rates at record low iin a bid to accelerate the inflation. But despite a sluggish trading market, the Australian retail sector remained upbeat, with many consumer stocks rising despite the apprehensions in the air.
Retail investors showed confidence in the consumer stocks on the back of growing retail sales. Australian retail sales continue to roll on a growth trajectory by recording an uptick of 0.6% in January 2021 from the previous month. While the sales figures released by the Australian Bureau of Statistics remained substantially below the anticipated 2% forecast, growth in retail sales despite Brisbane lockdown hints at liquidity in the economy.
This, coupled with upcoming vaccine rollouts, paints a brighter picture of the economy, prompting many investors to turn to penny stocks anticipating higher returns. In this backdrop, let us look at the four retail penny stocks which are in the spotlight.
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GLG Corp Ltd (ASX:GLE)
GLG Corp is a global supplier of casual knitwear, especially across the Asian retail industry. GLE shares gave a YTD return of 142% and last traded at AUD 0.290 on 4 March 2021.
The apparel retailer diversified its business into fabric masks manufacturing and direct land duties paid businesses, which have helped ensure its overall performance. In response to COVID-19, better cost control measures were also implemented, backing the financial results of GLG Group.
Here are some major highlights from GLG Corp’s first half-year results for FY21:
- Increase in revenue by 32.3% on the pcp to US$99.5 million in 1HFY2021.
- Gross margin improvement from 15.2% to 19.6% in 1HFY2021
- Net profit after tax for GLG increased by US$0.9 million to US$1.3 million.
The Board has declared an ordinary dividend of US1.0 cents per share (fully unfranked) for the financial year ending 31 December 2020.
Candy Club Holdings Ltd (ASX:CLB)
Candy Club Holdings operates in the US markets as a specialty market confectionery company through an omnichannel strategy, catering to both B2B and B2C segments. CLE shares posted a YTD return of 80% and closed at AUD0.225 on 5 March 2021.
The company achieved YoY revenue growth of 205% during 4Q FY2020, with total revenue for the quarter being AUD3.29 million. The strong performance was powered by the B2B segment of the company, which showed an impressive 509% YoY growth.
The company managed to put up a strong show despite the exceptionally challenging operating situation in the US, impacted by the COVID-19 pandemic.
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Candy Club Holdings’ preliminary report for the year ended 31 December 2020 highlighted the following:
- Increase in net revenue from ordinary activities by around 83.5% on the pcp
- Loss after income tax expense for the period down by 16.8% on the pcp
- No dividends during the financial period.
Candy Club expects the growth trajectory to continue in FY2021 on the back of robust performance by the B2B segment.
Rpm Automotive Group Ltd (ASX:RPM)
Rpm Automotive Group is Involved in import and retail of automotive parts as association equipment. The company’s shares offered a YTD return of 34% and closed at AUD 0.275 on 5 March 2021.
As the state and international borders remain shut, the popularity of domestic driving holidays, off-roading activities and 4WDing (four-wheel driving) has surged as an alternative to interstate and international air travel. This has clearly boosted the company’s business. Furthermore, the automotive company was also engaged in quality business acquisitions including Traralgon Tyre Service during 2020 to boost the business further.
The company anticipates:
- FY2021 full-year revenue forecast to rise by 44%
- FY2021 full-year EBITDA to improve by 37.6%
- 24.6% YOY growth in Gross profit for FY2021
Funtastic Ltd (ASX: FUN)
Funtastic Develops and distributes toys, confectionery and other sporting products. The company posted a YTD return of 36% and closed at AUD 0.11 on 5 March 2021.
Funtastic Limited divested its Confectionery Business to Sweet Season Pty Ltd. for AUD 1.05 million. The move aligns well with the company’s continuing strategic review of operations, customer segment, and product ranges. The company also recently acquired an e-commerce business, Hobby Warehouse Group.
As per November 2020 update:
- Consolidated Revenue for November 2020 edged up 60% on the pcp
- Consolidated Gross Profit for November 2020 up 78% vs pcp
- Consolidated Revenue of $14.0 million for Q1 FY21
- Q1 Consolidated Gross Profit of $3.6 million