Shares in jewellery retailer Lovisa Holdings Ltd (ASX: LOV) have terrifyingly fallen 18% over the past week.
But even with that dip, the shares have climbed an impressive 46% over the past year, and a mind-blowing 424% since the COVID-19 crash in March 2020.
Investors have fallen in love with the business’ rapid expansion in recent times, even as other stocks have struggled in the face of steeply rising interest rates.
So what’s going on? Is this current dip the buying opportunity of a lifetime?
Let’s examine the situation:
No news is good news?
First thing to note is that Lovisa itself has made no public announcements in recent times that would trigger investors to flee.
Its last communication to the ASX was its half-year results presentation back in February.
There are no insider transactions to report either.
So the violent dip in Lovisa shares could simply be an exaggerated manifestation of the general fall in retailer shares over the past few days.
The S&P/ASX 200 Consumer Discretionary (ASX: XDJ) index has tumbled 3.8% just this week.
How do the professionals feel about Lovisa shares?
Professional opinion seems to still favour Lovisa shares.
The team at Morgans sees close to a 30% upside from the current valuation.
“Another S&P/ASX 200 Index (ASX: XJO) growth share that could be a buy is fast-fashion jewellery retailer Lovisa,” reported The Motley Fool’s James Mickleboro.
“It could be a top long-term option due to the popularity of its affordable offering and its huge global expansion plans.”
He added that Morgans analysts reckon “Lovisa is showing every sign of becoming a global brand”.
The Motley Fool’s Tristan Harrison said this week that Lovisa is a brand that targets a younger demographic that’s not necessarily devastated by interest rate rises.
“They’re less likely to own a property, while also benefiting from wage growth and the low unemployment rate.”
According to CMC Markets, nine out of 14 analysts currently rate Lovisa shares as a buy.
So with no bad news to note and professional investors still bullish on the stock, the current trough in Lovisa shares seems a tempting buying opportunity.
