I can’t understand men who say “I hate shopping“. I think it’s great fun. There will never be a ‘demise of the High Street’, as there’s no better way to spend a sunny spring afternoon than browsing your local stores.
The new year results for the big High Street retailers have, however, disappointed, leading to tumbling share prices. But I think this has provided an opportunity to buy in at bargain prices. So here are three retailers that I think you should invest in right now.
Next
Next (LSE: NXT) has been the retail success story of the past decade. Ever since the crash of 2008, the share price has risen with what has seemed unstoppable momentum as Next showed it could deliver the fashion and home goods customers wanted at affordable prices. From 1,000p, the share price rocketed to 8,000p in 2015. But as the growth in profitability has slowed, so the share price has fallen.
Yet this is still a company that impresses. Not only is it one of Britain’s leading High Street retailers, but it now has branches around the world and a strong online business. And the fundamentals are strong, with a P/E ratio of 11.75, and a dividend yield of 2.92%. This firm exhibits a combination of a high yield and growth that’s enticing. Neil Woodford has recently bought in, and I think you should too.
Marks & Spencer
Marks & Spencer (LSE: MKS) has long been Next’s great rival on the High Street. In terms of margins, Next has much stronger profitability, and is arguably the higher quality company as M&S has struggled to turn around its clothing business. But M&S is strong in foods, despite the headwinds facing UK grocery retailers, and is also growing earnings, as well as having the potential to expand overseas and online.
And this company looks appealing with a P/E ratio of 12.7 and a dividend yield of 4.37%. Again a combination of growth and a high dividend make M&S a worthy buy.
SuperGroup
In contrast to these venerable retail giants, relative newcomer SuperGroup (LSE: SGP) is a much smaller company. But this means the potential for growth is greater. From a few market stalls in Cheltenham, founder Julian Dunkerton came up with the idea for a casualwear brand that fused 1950s-style Americana with Japanese modernity and the idea has resonated with shoppers.
The combination has produced a fashion brand that is one of fastest growing youth/millennial retail labels in the world. With special collections like the recent Idris Elba collaboration and a programme of international store openings, particularly in Europe, steady growth is pencilled-in for the next few years.
Like many fashion businesses, it sometimes faces short-term challenges, but it has proved it can bounce back. And while a P/E ratio of 18.44 with a dividend yield of 1.66% is more demanding, this is still one to buy into if you’re looking for a long-term growth play.
