James Abela of Fidelity International: "What is the one growth...

James Abela of Fidelity International:
"What is the one growth stock that you particularly like and why?

Lovisa (ASX: LOV) is a specialty retailer company that has carved out a niche in low-price point jewellery that is:

• selling an on-trend product that is well-researched by following social media trends
• offers a low-cost, small store footprint
• high inventory turnover
• high gross margin product range
• resulting in a high return on capital business.

There is structural growth for this business over the next three years, as the store network continues to grow around the world. Operating discipline is generating strong cash flows which can be reinvested into the store network.

A strategic focus on following social media, fashion trends, influencers, novelty items and on-trend product that is offered to customers at an affordable price point has been a winning business position in a competitive marketplace.

Financially, the return profile is very strong with recent returns on capital near the 90% level, which is nearly 10x the average Australian mid and small cap universe.

Currently the company is trading on a Price to Earnings ratio of 36x, which is double the index universe, but given the growth and return profile, this continues to look attractive. "
https://www.livewiremarkets.com/wir...ocks-and-4-ideas-that-stand-out-from-the-pack