10 Consumer Discretionary Stocks in ASX Bull Run

Summary

• Since March lows, equity markets have been experiencing a decent run. With reporting season starting to pick up gradually, businesses that have managed the crisis efficiently are delivering better-than-expected results.
• Many companies have also surpassed the pre-COVID price levels, especially those businesses that have experienced lockdown effects as blessings.
• Investors have also preferred capital-light, low-debt and high-cash generative businesses at the backdrop of pandemic.

Nick Scali Limited (ASX:NCK)

Shares of Nick Scali exploded this morning after the company disclosed its full-year results. Despite the pandemic, the company’s sales were down 2% at $262.5 million. The sales performance of NCK was better than initially expected due to higher deliveries.

The company highlighted that current orders give good visibility on forward revenue for 1H FY21. NCK was able to protect gross margins from AUD depreciation through pricing initiatives and supplier support. Underlying EBITDA for the year stood at $65.7 million, while underlying NPAT was noted at $42.1 million, above guidance of $39-40 million.

With a final dividend of 22.5 cps, the full-year dividend stood at 47.5 cps, up 5.6% year-on-year.

After experiencing a significant rebound in customer activity during May and June, Nick Scali acknowledged that sales momentum continued in July with higher opening order book than the previous year. The company expects sales to grow in the first half of FY21 and 1H profit to grow by minimum 50-60%, assuming no further closures in Melbourne or in other states and no supply chains issues.

On 6 August 2020, NCK last traded at $8.8, up by 14.583% from the previous close.

Marley Spoon AG (ASX:MMM)

COVID-19 pandemic has accelerated the sale of Marley Spoon products and contributed to its business performance. Retention of new customers has remained strong, and acquisition costs are down. In Q2 2020, the company recorded revenue of €73.3 million, up by 129% over the same period last year. MMM posted its first positive operating EBITDA on group level at €4.5 million for the period.

Due to the increased digital adoption, MMM is expecting strong revenue growth with a minimum 70% revenue growth forecast for CY2020 compared to earlier anticipated 30% year on year growth for the year.

On 6 August 2020, MMM last traded at $3.320, up by 0.912% from the previous close.

Baby Bunting Group Limited (ASX:BBN)

Baby Bunting is expecting pro forma EBITDA between $33 million and $34 million for FY20, implying growth of 22% to 25%. Pro forma NPAT is anticipated in the range of $18.5 million to $19.5 million, while statutory NPAT is expected between $9.5 million and $10.5 million.

The company has also reported that its stores in Melbourne remain open in the Level 4 restrictions that are currently in place. Some minor adjustments were being made to ensure compliance with Level 4 requirements at its Distribution Centre and online operations.

On 6 August 2020, BBN last traded at $3.590, down by 1.374% from the previous close.

Adairs Limited (ASX:ADH)

Adairs has also experienced strong sales after the re-opening across its network and online channels, and its omni channel focus has paid off in the wake of pandemic with stronger online sales. In the trading update released in June, the company reported decent growth in sales, especially online sales.

The company is expecting to announce full-year results on 26 August 2020. ADH has total sales forecast between $385 million and $390 million. Management believes that the business is well positioned to face the risks and respond to opportunities.

On 6 August 2020, ADH last traded at $2.730, up by 8.765% from the previous close.

Beacon Lighting Group Limited (ASX:BLX)

Owing to the stage 4 restrictions applied in Melbourne, Beacon Lighting’s all 28 stores in the city will remain closed for in-store retail customers for a six-week period. Several other businesses of the company in the region will have impact of different degrees.

Last month, the company reported that business achieved ‘outstanding’ results despite the pandemic. This was possible due to an agile team and support from valued customers. The company continues to innovate the lighting and ceiling fan categories.

In FY20, based on the unaudited sales result, the company achieved statutory sales of around $252 million and underlying sales of around $251 million, excluding Beacon Energy Solutions. During the year, the company achieved comparative store sales growth of 7.2% and online sales growth of 50.6%.

Beacon Lighting achieved statutory net profit after tax of around $22 million, implying growth of 38.5% on FY19. Underlying NPAT was approximately $19 million, up by 16.7% over the previous year.

On 6 August 2020, BLX last traded at $1.145, up by 4.091% from the previous close.

Temple & Webster Group Ltd (ASX:TPW)

Recently, Temple & Webster released pre-audit full-year results for the year ended 30 June 2020. Its revenue for the period was $176.3 million, up 74% over the previous year with a strong contribution in second half and last quarter.

The period was cash flow positive year for the company, which ended the year with $38.1 million cash and no debt. The company has completed a $40 million equity raising recently. In June, there was a first $2 million-day for TPW, which highlighted that initial trading in FY21 has continued the momentum experienced in the last quarter.

On 6 August 2020, TPW traded flat at $8.

Collins Food Limited (ASX:CKF)

A few months back, Collins Food, operator of Taco Bell, KFC and Sizzler, reported full-year results for the period ended May 2020. Its revenue was up 8.9% to $981 million compared to $901.2 million in FY19.

After AASB16, EBITDA for the period was $175.6 million compared to $112.1 million in the previous year. Likewise, NPAT was $31.3 million against $39.1 million in FY19. The update highlighted that the business continues to progress in its e-commerce channels.

Collins Food noted that the company remains operationally prepared for the second wave and committed to maintaining strong unit economics across a range of scenarios.

On 6 August 2020, CKF last traded at $9.630, up by 0.522% from the previous close.

Domino’s Pizza Enterprises Limited (ASX:DMP)

Domino’s Pizza Enterprises gave a presentation in June. In Europe, the company stated that stores were operating largely albeit staggered restrictions in markets. Management believes that consumers are likely to stay at home this summer.

In Australia, it was highlighted that new practices would remain in place for long, and the company would continue offering alternatives to dine-in restaurants. Japan was on a semi lockdown, and zero contact delivery was embraced by customers.

On 6 August 2020, DMP last traded at $75.580, up by 0.079% from the previous close.

Kogan.com Ltd (ASX:KGN)

Kogan.com has managed to capitalise on the change of consumer behaviour in the wake of pandemic. Similar to each e-commerce business, Kogan has also witnessed a strong increase in revenues and customer base.

Over the recent past, the company has been posting record results each month, raised further equity capital and acquired a furniture business.

On 6 August 2020, KGN last traded at $18.980, down by 0.21% from the previous close.

JB Hi-Fi Limited (ASX:JBH)

JB Hi-Fi has recently announced that due to Level 4 restrictions by Victorian Government, the company has temporarily closed its 67 stores in Metropolitan Melbourne, which include 46 JB HI-FI stores and 21 The Good Guys stores.

The company, which continues to trade through its online channels and commercial operations, is able to fulfil customer demand through home delivery, and click and collect. JBH expects to report total sales of $7.86 billion in FY20.

On 6 August 2020, JBH last traded at $45.780, up by 2.21% from the previous close.

(All currencies in AUD unless or otherwise stated)