boohoo shares are up this month! Here’s what I’m doing

boohoo shares are up almost 10% in the last 30 days, which could mark the start of a promising turnaround. This Fool asks whether now is the right time to buy.

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boohoo group’s (LSE: BOO) share price has been fascinating to follow over the past few years. The online retailer’s stock has fallen over 92% from its 2020 highs. Plagued by the likes of Brexit, the post-pandemic physical stores’ recovery, supply chain issues and wider market uncertainty, the shares have certainly had a tough time.

However, in the last 30 days, the stock has risen a healthy 8.5%. Given this renewed momentum, could now be the right time for me to add it to my portfolio?

Poor performer

At the height of the pandemic, boohoo shares shot up to 413p in June 2020. Remaining pretty volatile throughout the year, the stock finished 2020 at around the 340p mark.

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In 2021 boohoo was plagued by a scandal surrounding the treatment of some workers at companies to which it outsourced production. Additional complications arising from Brexit disrupted supply chains making matters worse for the fashion retailer. The rise of cheaper competitors such as Shein and Temu has also dented boohoo’s market share.

These factors combined with a wider market downturn have pushed boohoo shares down to just 33p as I write (6 November).

Bad results

Last month, boohoo released its half-year results. Revenue and gross profit figures showed a 17% and 16% year-on-year fall, respectively. It also stated that it expects revenues to decline by between 12% and 17% in 2024, due to slower than anticipated volume recovery. Based on this, it seemed that investors had little to be excited about.

However, the group did report some positive metrics. These included a 16% reduction in operating costs, a £94m reduction in inventory, and increased margins. However, given such poor top-line figures, I’m not sure these tip the dial in favour of investing.

Light at the end of the tunnel

A great way to spot a good investment is by tracking the market moves of seasoned veteran investors. In the case of boohoo, one big name has been loading up on shares. Mike Ashley, CEO and majority shareholder of Frasers Group has built up a substantial 15.1% holding in boohoo through his vehicle MASH Holdings.

While this could just be a play to acquire the brand and its inventory – which wouldn’t necessarily generate any value for shareholders – it always gives me some confidence when an industry titan buys in.

In addition to this, analysts have indicated that the company expects to increase earnings by 75%. This could spur significant investor momentum should the predictions come to fruition. That being said, boohoo isn’t expected to be profitable for the next three years.

The verdict

All things considered, I don’t think boohoo shares fit my buy criteria. Poor results and fierce competition are both major red flags for me. Although the company has taken some steps to remedy its key issues, I don’t think these outweigh the risks. Although the share price has enjoyed a small uptick this month, I won’t be buying any time soon.    

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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.

Dylan Hood has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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