2 retailer stocks I would invest big money in

Fast-fashion and online shopping companies seem to be taking the world by storm, here are two I want to invest in

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Many UK fashion stores — both big chains and independents — have been going under or closing locations due to falling physical store sales, high costs and consumer caution. The problem is that many of us are going online for cheaper clothes and more convenience… and we don’t have to move off our sofas to do that.

As a result, I believe there is money to be made by investing in fast-fashion e-tailers, which is why I intend to put more money than ever into these two businesses.

A brighter future

ASOS (LSE: ASC) may seem like a somewhat surprising choice considering the 87% pre-tax profit drop the business reported in April this year. However, investors still appear to be backing the company, seeing much brighter times ahead and perhaps listening to Nick Beighton, the CEO who claims that “ASOS is capable of a lot more”.

Despite the fall in profits, its online visits have risen by almost 16% this year. Furthermore, Topshop and Topman have recently agreed to launch ranges on the website in the next few months. ASOS has been one of the Arcadia-owned chains’ biggest rivals, so it is a big development for the company to now have those brands drawn into its eco-system and on its website. Topshop has had its own troubles, but it remains a strong attraction and the agreement could drive an increase in traffic and profits for ASOS.

The fact that two high street fashion rivals have decided to sell ranges on the site really does say a lot about the powerful position the company is in. The stock is priced at around 3,268p at the time of writing with a P/E ratio of 33.71 but I still believe that it’s the perfect time to buy, despite what has been an unstable P/E recently. Analysts predict that the share price will increase by 22.7% in 12 months. Furthermore, analysts were 25.67% below with their predictions on ASOS’s annual profits last year, suggesting that the company keeps outperforming. With major brands selling on the site, a powerful presence online and comforting predictions, I think it is worth the investment.

Conquering the US

Boohoo (LSE: BOO) is another online fashion retailer that I want to invest in, although some might think I am too late. This year has seen Boohoo’s shares rising 50%, which is understandable as profits have climbed a massive 48% in the past year.

Boohoo shares are currently priced at around 230p with EPS climbing a whole 29% this year to 4.15p. The shares have a P/E ratio of 71 which does raise concerns that they are overvalued. However, I believe the stock is worth the investment thanks to its fantastic growth this year, strong net cash of £194m and its popularity abroad. Boohoo is not just the Boohoo brand. It is now a multi-brand group and its other brands have not let it down with PrettyLittleThing and Nasty Gal seeing revenue rising by 107% and 96% this year. These brands have strong international growth potential. All three are up 79% in the US, with the rest of Europe also up by 72% this year.

Boohoo’s revenue is expected to climb another 30% this year and analysts are predicting the share price will be 831p in 2024. Meaning, if you buy now at 230p you could gain 276%+ in five-years. I feel comfortable investing my money in this company. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

fional has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended boohoo group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Up 26%, can the BT share price really push higher still?

The BT share price has surged on several catalysts in 2024, but there’s evidence to suggest that the stock could…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

What are the best dividend shares to buy right now?

As shares in B&M European Value Retail have fallen, the dividend yield has reached a 10-year high. Should investors be…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

My favourite FTSE 100 passive income stock that keeps the Christmas coffers full

The holiday season is expensive and can leave many consumers struggling to make ends meet. Here’s how I use a…

Read more »

Investing Articles

The latest growth forecasts suggest the Glencore share price will hit 555p!

Harvey Jones has been disappointed by the performance of the Glencore share price since he bought the commodity stock last…

Read more »

Dividend Shares

A closer look at the 11% dividend yield forecast for Phoenix Group shares

Phoenix Group shares have one of the highest dividend yields in the FTSE 100 index today. Could this be a…

Read more »

Investing Articles

If I’d put £25,000 into the FTSE 350 at the start of 2024, here’s how much I’d have today!

Many FTSE shares have rebounded this year as interest rates look set to keep heading lower and market appetite for…

Read more »

Investing Articles

Up 40%, but experts forecast the easyJet share price could soon hit 664p! Time to buy?

The easyJet share price has been flying lately and stock analysts are predicting more fun to come. But there's only…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Worried about tax raids? Here’s how I’m targeting a £44,526 passive income with shares

Investing in a Self-Invested Personal Pension (SIPP) or Individual Savings Account (ISA) can supercharge one's passive income, says Royston Wild.

Read more »