Top broker Macquarie has revealed several of its ASX stock picks in the consumer discretionary and consumer staples sectors.
Its recommendations follow the annual Macquarie Conference where scores of ASX companies made presentations to investors.
Here are Macquarie's top picks in these sectors.
Consumer discretionary products and services are the 'nice-to-haves' that we enjoy in life, such as electronic devices and holidays.
Macquarie's top ASX stock picks include JB Hi-Fi Ltd (ASX: JBH), Nick Scali Ltd (ASX: NCK), and Universal Store Holdings Ltd (ASX: UNI).
Macquarie said:
In discretionary, the data suggests ongoing strength for JBH, and we remain positive given relative valuation.
In SMIDs, we retain our preference for NCK, with further GM% upside driven by Nick Scali products delivered to UK stores. Additional store openings in the UK are an upside risk.
The broker said electronics remains a key area of growth in the consumer discretionary sector, which bodes well for JB Hi-Fi shares.
Macquarie said:
In Electronics, we see JBH as the key winner as its value proposition resonates with consumers in categories that continue to become less discretionary (i.e. mobile phones, computers).
Macquarie has a 12-month share price target of $111 on JB Hi-Fi and $75 on Wesfarmers.
This suggests investors who buy JB Hi-Fi shares today could enjoy a potential 7.5% gain over the next 12 months.
It's a different story with Wesfarmers, which hit a new record-high share price of $80.79 today.
Despite Macquarie's outperform rating on the consumer discretionary sector's largest stock, the broker expects a 7% drop ahead.
The broker also has an outperform rating on Universal Stores shares with a $9.80 price target.
The Universal Stores share price is currently $8.49, up 3.9%. The broker's forecast suggests a possible 15% upside from here.
Macquarie also names Breville Group Ltd (ASX: BRG) as a top ASX consumer discretionary sector stock pick.
It has an outperform rating on Breville and says the company is one of 17 stocks set to benefit from the US-China tariff deal.
The broker has a price target of $41.10 on Breville, which is trading at $33.01 on Tuesday, up 8.5%.
This implies an appealing 24% potential upside.
Consumer staples are the basic products and services we need to support our lives, such as food, household goods, and healthcare.
Macquarie likes the defensive earnings growth of ASX 200 supermarket stocks Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW).
The broker has an outperform rating on both stocks, citing "sales holding and other initiatives to support earnings growth".
The Coles share price is currently $21.38, down 4% today.
Macquarie has a 12-month share price target of $23.10 on Coles. This implies a potential 8% upside from here.
Meanwhile, the Woolworths share price is currently $31.66, down 3.4%.
Macquarie has a price target of $33.60 on Woolworths shares, suggesting a potential 6% upside for today's investors.
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