With the holiday season fast approaching I take a look at 3 mid-cap ASX shares that might be worth buying before Christmas.
Lovisa Holdings Limited (ASX: LOV)
Lovisa was established in 2010 and has rapidly become one of Australia’s leading fashion jewellery and accessory retailers. The Lovisa share price has taken off in recent times, up more than 30% since the start of August. The strong support defies the ongoing weak consumer sentiment and general negativity surrounding the retail space in Australia.
Lovisa has been expanding its store network and was able to increase gross profit by 16% last financial year as a result. With the expansion into international markets set to continue for at least a few years, revenue is set to continue to climb higher.
Entering other international markets also provides some added diversification, which goes some way to protecting profits in the event that Australia indeed suffers a material economic slowdown in isolation to the rest of the developed world.
Lovisa shares are looking a little pricey to me at the moment but with profit growth likely for a few years to come, a pullback in the share price closer to $10 may present a good buying opportunity.
InvoCare Limited (ASX: IVC)
InvoCare is the largest provider of funeral services in Australia, New Zealand and Singapore. It operates at 290 funeral locations and is the largest operator of private cemeteries and crematoria in Australia.
InvoCare is a very resilient business that is less affected by prevailing macroeconomic conditions than most. In both good times and bad, people will continue dying and with an older demographic in Australia, demand for their services could be set to increase for years to come.
The funeral industry in Australia is still highly fragmented which may also provide many opportunities to make bolt-on acquisitions in the future. With the InvoCare share price down nearly 20% since July, InvoCare is starting to look attractively priced given its defensive cash flows.
ARB Corporation Ltd (ASX: ARB)
ARB Corporation is the largest manufacturer and distributor of 4×4 accessories in Australia. The company has proven to be a huge success over the past decade, growing its net profit after tax (NPAT) at a compound annual growth rate (CAGR) of 9.7% per year.
In the most recent financial year, ARB managed to increase net profit after tax (NPAT) by more than 12% to $57.1 million.
As you’d expect, the ARB share price has mirrored the spectacular business performance and is up more than 350% excluding dividends over the last decade.
However, profit margin pressure, due to the strong thai baht currency (Thailand is where a number of their products are manufactured), has meant that ARB’s management recently revised downwards their profit guidance for the first half of this financial year. The share price has subsequently fallen more than 10% and is starting to look appealing on a long term basis.
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At the time of publishing, Luke has no financial interest in any companies mentioned.
