The last year or so has been decent for many London-listed companies. However, some lower down the market spectrum have absolutely shot the lights out. Here are two examples, both of which still look like great UK shares to buy now.

Growing at a fast clip

One business that’s been going great guns recently is Clipper Logistics (LSE: CLG). The self-styled ‘retail logistics expert’ and returns manager has benefitted from the explosion in e-commerce in recent years. Multiple UK lockdowns have further boosted trading (and the share price).

June’s update provided a snapshot of just how well things have been going. Revenue for the full year to the end of April is now expected to come in at £698m. That’s a 39% jump on the previous year, partly due to the company winning new contracts with Joules and JD Sports, among others.

In addition to this, CLG recently signed a three-year extension to its contract with ASOS to handle the latter’s returns on the continent.

Taking all this into account, it’s perhaps no surprise Clipper believes EBIT (earnings before tax and interest) for FY22 and FY23 will now be ahead of consensus estimates “by mid-single-digit percentages in both years.“

Right now, the stock trades on 29 times forecast earnings. That’s pretty high, especially as a rise in unemployment post-furlough could prove a setback for retailers and possibly Clipper. Margins, while improving, are also fairly low in this kind of work.

However, this valuation seems more reasonable when looking at the company’s growth strategy. In addition to building its presence in Europe, the £800m-cap plans to launch a B2B online marketplace in September. This will target buyers from the “highly fragmented” elderly care market. Should it prove successful, Clipper may consider expanding the platform into other sectors.

A rapidly reducing debt pile is another positive.

Lighting up the market

A second company whose share price has been soaring has been Luceco (LSE: LUCE). The company is a market leader in LED lighting, portable power products and wiring accessories. Brands include Luceco LED, BG Electrical and Masterplug.

Half-year results are due early next month. However, we already know from July’s update they’ll be decent. Back then, LUCE announced that demand for its products had been “stronger and broader than expected.“

As a result, it now expects to hit revenue of £108m for the first six months of 2021. Adjusted operating profit is likely to come in at £19m. Both numbers are slight improvements on previous guidance.

To round things off, Luceco said figures for the whole of 2021 would now be ahead of what analysts had been predicting. Indeed, CEO John Hornby expects “another year of record results.” No wonder the shares have been in such great form.

But how much is this in the price? Personally, I don’t think the valuation of 20 times earnings is excessive. As such, I’d feel comfortable adding Luceco to my list of UK shares to buy.

This isn’t to say it’ll be plain-sailing. Despite managing to protect margins so far, “industry-wide” cost inflation looks like being a headwind for a while. The home improvement boom will surely moderate at some point too.

Still, there’s a very secure dividend to compensate for any turbulence.

The post 2 ‘unstoppable’ UK shares to buy now appeared first on The Twelfth Magpie.

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• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended ASOS, Clipper Logistics, and Joules 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.

Today’s pre-close trading update for the year to 26 May contained more good news for those already holding the casual-clothing-to-wellies-seller.

At £218m, revenue was 17.2% higher than the previous year with the “strong momentum” seen in the first six months of the financial year and over Christmas continuing into the second half  — something the small-cap partly attributed to overseas growth.

Reassuringly, the 30 year-old company’s online operations “performed particularly well,” so much so that they now contribute 50% of the £159.1m revenue from retail. 

Wholesale revenues were 2.9% higher with strong growth reported in the US and Germany. In fact, approximately half of sales in this part of the business now come from overseas.

All this (and combined with cost savings) has led management to predict that underlying pre-tax profit will be “at the top end of the range” of analyst forecasts. So, somewhere near £15.3m. 

Stock in Joules was trading at 19 times earnings before markets opened. That’s clearly not as cheap as retail peers such as Next which also boasts a better yield (2.9% vs Joules’s 1%). 

Nevertheless, Joules does have qualities that investors tend to be willing to pay out for such as high returns on capital and plenty of cash on the balance sheet.

The potential for more growth overseas also goes some way to justifying the valuation, at least in my view. At this point in time, the company’s international business contributes ‘just’ 16% of total revenue — a proportion that I think will only increase over time, so long as management remain disciplined in their approach.  

Joules continues to look like a great business. Since I’ve already got a small holding in another clothing retailer, however, I’m prepared to sit on the sidelines for now. Should a general market wobble come along, I could be sorely tempted. 

Growth and income

Another small-cap impressing the market today was freight manager Xpediator (LSE: XPD).  According to the market minnow, demand for its services “remains strong.” In addition to trading in line with market expectations, it commented on seeing a lot of “bolt-on opportunities” which could generate value for the company, if acquired.

Aside from this, a number of management changes were announced, including the promotion of CFO Stuart Howard to CEO from September. Stephen Blyth — Xpediator’s current CEO — will move to the position of executive chairman and focus on developing the company’s strategy and merger and acquisition opportunities. My only slight concern here is that Howard will combine his CFO and CEO roles if a replacement for the former isn’t found in time.  

Right now, you can pick up Xpediator’s stock for just 9 times earnings. For a company that’s tripled in size in just two years and shows no signs of slowing down, that looks good value to me. Its asset-light business strategy (it doesn’t own a fleet of trucks and therefore has low overheads) also appeals, as does the secure-looking 4% dividend yield.

Still relatively unknown among retail investors, I continue to think that Xpediator could be worth buying as part of a diversified portfolio.

The post These small-cap stocks just keep growing. Time to buy? appeared first on The Twelfth Magpie.

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• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Joules 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.

A class act

FTSE 100 firm Next (LSE: NXT) appears to be navigating the shift online with supreme skill and January’s trading update showed exactly how this is working.

Retail sales fell by 7% during the year to 29 December, but online sales rose by 14.9% over the same period. Overall, the group’s full-price sales rose by 2.6% during the year.

What these figures tell me is that Next’s customers are still buying. They’re simply shifting their purchases online. To make allowance for lower store sales, Next is closing physical units if it can’t negotiate lower rents on lease renewals.

A hidden attraction

This business also has another attraction that’s less obvious. A significant number of Next customers buy on credit. According to the firm’s interim results, credit customers owe the group about £1.1bn. Management expect this to generate a net profit of about £123m for the current year. That’s about 20% of this year’s forecast profits.

This finance income is one of the reasons why Next is one of the most profitable businesses in the UK retail sector, with an operating margin of about 19%.

Shares in this quality retailer are currently on sale with a 2019 forecast price/earnings ratio of 11 and a dividend yield of 3.4%. Although growth is expected to be limited over the next year, I think this is too cheap. I’d be a long-term buyer while the shares are under £50.

An upstart rival with strong growth

Next isn’t the only fashion retailer that’s profiting in stores and online. A smaller but more upmarket alternative is Joules (LSE: JOUL), which listed on the AIM market in 2016 and has a market-cap of £227m.

Half-year figures published on Wednesday show that sales rose by 17.6% to £113.1m during the six months to 25 November. Underlying pre-tax profit rose by 14.7% to £10.7m. Joules is also expanding overseas with international revenue rising 64.2% during the half year and now accounts for more than 15% of total sales.

One problem

The only problem I have with these figures is that this company doesn’t separate out online and retail (store) sales in its published accounts. This is unusual, as it makes it impossible for investors to understand how the group’s store network is performing.

We are told that internet sales now account for 46.5% of all retail sales, up from 35.8% at the same point last year. Despite this, the number of stores and concessions operated by the company has risen from 118 to 157 over the same period. What kind of contribution are these outlets making to sales and profit? We simply don’t know.

Should you buy Joules?

The firm says its stores are increasingly important for click & collect and online returns, as well as sales. I can see the strength of this argument, but I’d still like to see the cold hard numbers.

Although Joules is undoubtedly profitable and growing, I feel the shares are fully priced on a 2018/19 forecast P/E of 19. I won’t be investing just yet.

The post Thinking of buying the Next share price? Read this first appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Joules 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.

Priced at 255p a pop back at the beginning of 2018, the shares fell 90% to end the year a little under 26p following a couple of profit warnings. 

Based on today’s trading update for the 18 weeks to 29 December, it looks like 2019 could be just as tough for the Rochdale-based firm and its investors. 

Revenue up, but…

At first sight, it doesn’t seem so bad with the company growing revenue “across all channels and all major product categories“. Total revenue rose 14% to a little over £102m. Online sales jumped 28% to £36m and have now contributed a third of total revenue for the year-to-date. Revenue from retail stores was also up 5% to £63.7m.

So, why were the shares down 13% in early trading? Much of this is likely due to the news that gross margin for the full year will now be “lower than previously anticipated” as a result of Footasylum needing to offer more promotions to entice shoppers to buy from the company rather than from rival retailers. This pretty much negates all of the previous positive talk about rising revenues. 

Another reason is the (unsurprisingly) downbeat outlook. According to the company, trading conditions experienced over the first half of its financial year “have continued throughout the Christmas trading period“, leading it to state that its short-term future is “undeniably challenging“. As a result of its desire to focus on cash and working capital,  a cost reduction plan was also announced which may generate some exceptional costs in the current financial year. This means that adjusted earnings will now be “towards the lower end” of analyst forecasts.

I’ll admit to becoming rather interested in Footasylum when it began falling early last year. However, with consumer confidence now likely to remain weak for some time, especially with Brexit just around the corner (at least officially), I’ll continue to steer well clear. At a time when other retailers are closing stores in order to preserve cash, its decision to open five new sites (and upsize three others) in time for Christmas looks increasingly misjudged. There could be further pain ahead for those still holding.

Price jump

Also reporting today was lifestyle clothing and accessories business Joules Group (LSE: JOUL). 

Although its share price didn’t suffer to quite the same extent as Footasylum’s, many investors still chose to dispose of their holdings in the small-cap over 2018. From a peak of 387p back in June, the shares had fallen 37% in value before this morning’s trading update was released to the market.

The reaction to the latter, however, couldn’t be more different with the stock jumping 5% in early trading. 

Retail sales increased 11.7% over the seven weeks to 6 January with growth seen “across all the brand’s product categories” and almost half of these sales achieved online. Crucially, management continues to believe that pre-tax profit for the full year will be in line with expectations. With many retail stocks issuing warnings, this is pretty encouraging stuff.

On 18 times earnings before this morning, Joules isn’t cheap to buy, but it’s surely a more palatable option than Footasylum. Interim numbers for the six months to 25 November will be released in just over two weeks. 

The post This nightmare growth stock fell 90% in 2018 and there could be worse to come appeared first on The Twelfth Magpie.

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• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Joules 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.

However, amid the widespread doom and gloom, some retailers are thriving. Premium lifestyle brand Joules (LSE: JOUL), with its quirky take on British heritage style, is one such business. Founded in 1989 and floated on AIM just over two years ago, the company’s revenues and profits are rising fast — as is the share price. It was 160p at the IPO and has more than doubled to 340p. A 3.3% rise today follows the release of a positive trading update from the company, which now has a market cap of £300m.

Stylish growth stock

Joules told us that revenue for its financial year ended 27 May increased 18.4% (18.8% at constant currency) to £185.9m. Retail revenue was up 15.9%, with continued growth across the group’s UK and Republic of Ireland store estate and a “a very good e-commerce sales performance.” Wholesale revenue increased 24% (25.7% at constant currency), driven by strong demand from both its UK and international wholesale customers.

Analysts had upgraded their profit forecasts after the company’s half-year results in January and there’ll be a further small upgrade after today’s update, because we were told:“The board anticipates reporting that the underlying profit before tax for the period will be marginally ahead of analyst expectations.” The consensus had been for £12.6m, Joules informed us.

I reckon we’re looking at earnings per share (EPS) in the region of 11.75p — a 28% increase on the prior year. This would put the company on a price-to-earnings (P/E) ratio of 29 at the current share price. As the company pursues its strategy of further developing the brand in the UK and target international markets, I can see it delivering annual EPS increases above 20% and maintaining its P/E rating for some time to come. If so, investors today would double their money within four years. As such, I rate the stock a ‘buy’.

Sun, sea and profit

Online retailer of beach holidays On The Beach (LSE: OTB) is another fast-growing, profitable company that I rate a ‘buy’. A start-up business in a terraced house in Macclesfield in 2004, it listed on the stock market in September 2015 at 184p a share. The shares are now 510p, the market cap is £665m and the company is a constituent of the FTSE 250 index.

The shares have actually been considerably higher than their current level, reaching 650p just a month ago when issues resulting from the Monarch Airlines collapse cast a pall over its half-year results. Rare and temporary setbacks outside a company’s control can often provide a good opportunity for investors to buy, because the market tends to overreact. I believe this is the case with On The Beach.

City analysts are forecasting EPS of 21.1p for the company’s financial year ending 30 September. This would represent 20% growth on the prior year and give a P/E of 24.2. As with Joules, On The Beach is growing its UK business and expanding into targeted international markets. Again, I see a company that looks capable of notching up annual EPS increases above 20%, maintaining its P/E rating and potentially doubling investors’ money over a relatively short period.

The post 2 stocks that could double your money appeared first on The Twelfth Magpie.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Joules 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.

In crisis

Finding itself in a “perilous financial condition” as a result of increased competition and poorly performing stores, Mothercare revealed that it would refinance the business and restructure its UK portfolio through company voluntary arrangements (CVA) — agreements with creditors that allow a business to repay its debts over a fixed period of time.

The company has proposed to raise £28m in July through the issue of new shares. Revised debt facilities of 67.5m (with a final maturity date of December 2020) were also disclosed along with £18m worth of loans from the company’s largest shareholders and a trade partner. The latter will allow Mothercare to meet its short-term liquidity requirements.

All told, this should provide the company with up to £113.5m of funding as it attempts to turn things around.

On top of this, Mothercare will accelerate the reduction of its store estate to reduce losses and save on rent. A total of 50 stores will go, leaving a portfolio of 78 by 2020. There will also be “material rent reductions” at 21 other stores.

With Interim Executive Chairman, Clive Whiley, stating that the potential for the brand “remains significant”, is it time to reconsider investing in Mothercare? Not unless you have the patience (and optimism) of a saint.

Today’s huge rise needs to be put in context. In a little under three years, stock in the Watford-based business has collapsed in price from 300p to 21p (before today) as its market share has been pretty much eradicated by online competitors, low-price retailers (e.g Primark) and supermarkets. How the company can possibly stage a meaningful recovery when its UK operation hasn’t delivered a profit in six years is beyond me. 

Those inspired by legendary value investor Benjamin Graham’s penchant for finding “cigarette butt” stocks will be drawn to Mothercare, but I think most investors should steer clear. A price-to-earnings (P/E) ratio of 9 for the current financial year looks enticing but — with no compensation for taking on so much capital risk — the suggestion that it remains anything but a value trap remains fanciful.

Today’s news may be enough to postpone its permanent inclusion in the growing list of high street casualties, but I’m still of the opinion that the death knell for Mothercare will eventually sound.

A safer bet

Despite its undeniably punchy valuation, lifestyle clothing brand Joules (LSE: JOUL) feels like a far safer alternative. 

January’s interim results revealed an 18.2% rise in revenue and 22.5% increase in underlying earnings before interest, tax, depreciation and amortisation (EBITDA). With the company now starting to make serious strides overseas, it’s no wonder management anticipates full-year profit being “slightly ahead” of analyst expectations. 

As mentioned, there’s just one problem. Since arriving on AIM two years ago, Joules’s stock has climbed almost 75% in value, leaving the company trading at 28 times earnings for the soon-to-be-over 2017/18 financial year. That said, a PEG ratio of 1.55 suggests growth hunters would still be getting a reasonable deal. In complete contrast to Mothercare, Joules also has net cash on its balance sheet.

While I wouldn’t rush to buy the shares right now, the retailer is certainly one to consider should markets correct once again.

The post Here’s why Mothercare’s share price is flying today appeared first on The Twelfth Magpie.

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• Is there any value left in Lloyds shares now they’re over £1?
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• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Joules 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.

Same old story

As a company, Boohoo continues to fire on all cylinders with yet another storming set of numbers released earlier this month.

Over the four months to the end of December (which now includes the established Black Friday), it achieved record revenues for all of its brands “spread across all geographic regions“. The standout performer — PrettyLittleThing — grew revenue by a stonking 191% to £73.8m compared to the same period in 2016.

Raising guidance yet again, it now expects group revenue growth for the current year to be approximately 90% — up from the 80% predicted at the time it released its half-year numbers last September. 

So why is the company’s share price still roughly 30% lower than the highs achieved last summer? It looks like some investors have become concerned by the slight reduction in group gross margin mentioned in recent updates. Others may be wary that the market appears to have fully adapted to the company’s tendency to over-deliver. When expectations are already sky-high, there’s absolutely no room for error.

Nevertheless, I continue to believe that Boohoo’s best days still lie ahead. The increased investment in its distribution facilities is an indication of just how confident management is on the Manchester-based business’s ability to continue increasing sales. Moreover, the speed at which the aforementioned PrettyLittleThing and more recently acquired Nasty Gal brands have been integrated (and grown profits) suggests that further acquisitions can’t be ruled out.

With the company’s finances continuing to look sound (net cash of £127m) and the likelihood that its target market and low prices will cushion it from any sustained reduction in consumer spending, I remain bullish on the £2.1bn cap’s prospects.

Rising profits

Another company that looks likely to continue rewarding investors is lifestyle brand Joules (LSE: JOUL).  Since listing on the market back in May 2016, its stock has increased 64% in value. Based on today’s encouraging interim report, I can see this positive momentum continuing for a while yet.

Over the 26 weeks to 26 November, group revenue rose by 17.5% to £96.2m. In stark contrast to many retailers with a high street presence, Joules reported sales increasing by 14.2% at its stores. Online sales growth didn’t disappoint either, coming in at just under 20%.  

Given the shadow of Brexit and the benefits that come from geographical diversification, the 26.4% growth in revenue from overseas is a further positive. International markets now contribute just over 11% of the company’s total revenue — a figure that’s only likely to rise going forward. According to the company, it now has almost 1.1m active customers — an increase of 18% on H1 2016.

Perhaps most encouragingly, underlying pre-tax profit jumped 24.3% (to £9.3m) over the six months, leading management to state that full-year profit is now likely to be “slightly ahead of the range of analysts’ expectations”. The fact that retail sales over the seven-week Christmas period to 7 January rose 19.2% year-on-year certainly bodes well.

Thanks to its punchy valuation (28 times forecast earnings for the current year), Joules won’t appeal to those focused on finding value. However, today’s numbers, coupled with a fairly robust-looking balance sheet (£3m in net cash) and overseas potential could make it attractive to many growth hunters.

The post Boohoo.com plc isn’t the only high growth stock that looks like it’s just getting started appeared first on The Twelfth Magpie.

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Paul Summers owns shares in boohoo.com. The Motley Fool UK has recommended boohoo.com and Joules 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.

Joules in the crown

On 12 December, Joules gave investors an early Christmas present by posting an 18% jump in first-half revenues, despite describing market conditions as “challenging“, something that has hit other premium retailers. Today’s festive missive, which covers the trading performance of its retail business for the seven-week period to 7 January, goes one step further, with total retail sales growth up 19.2% year-on-year. If investors are unimpressed, they clearly have high expectations.

Today’s short and sweet update reported continued growth across both its store and e-commerce channels. Retail gross margins are holding steady as the £268m group maintains its “disciplined and selective approach to promotional activity”. CEO Colin Porter said retail performance through the Christmas trading period is “testament to the strength of the Joules brand, unique product proposition and customer engagement”.

British is best

I have long admired Joules for its strong brand positioning, with its focus on “quality, Britishness, family values, colour and humour,” and the strategy works beyond these shores, in the US, Germany, France and other European markets. It has 118 stores in the UK and a further 1,500 stockists worldwide. 

The one sticking point is its valuation, with the stock trading at a pricey 33 times earnings for 2017. However, that will be trimmed to 22.8 times in 2018, as earnings per share (EPS) growth moves on at a clip. It was a bracing 43% in 2016 and 33% in 2017, while City analysts now look forward to a healthy 19% in 2018 and 25% in 2019. Premium brand, premium price, premium prospects. It all fits.

Consumer goodie

Global household goods giant Unilever (LSE: ULVR) is a long-standing favourite of mine, and not a stock I would be in any hurry to sell. The failed Kraft-Heinz bid appears to have liberated management to take tough decisions, offloading its spreads business for €6.8bn, at a trailing valuation of 10 times EBITDA.

The Anglo-Dutch company is also looking to unify its corporate structure, to create a single leaner, more agile head office, although we have no decision yet. It is no respecter of its own traditions, as the recently announced closure of its Colman’s factory in Norwich confirms.

Connect 4

Unilever’s Connected 4 Growth programme is currently targeting healthy underlying sales growth of 3%-5% per year between now and 2020. Its stock is up 24% in a year, although it has slipped 6% in the last three months.

The £50bn FTSE 100 stalwart is also trading at a premium, as it usually does. However, today’s 25.3 times earnings multiple is forecast to fall to 19.2 in 2018. Anticipated EPS growth of 20% in 2017 and 9% in 2019, allied with a forecast yield of 3.3%, confirms the strong ‘buy’ case for Unilever, even as the FTSE 100 yields nearly 4%.

After saying that I’d sell Unilever to buy Joules, having looked at my own arguments, I am struggling to build an active ‘sell’ case for this sturdy blue-chip. Maybe pop both Joules and Unilever on your watchlist and wait for a market dip to trim those valuations?

The post I’d sell Unilever plc to buy this retail growth star appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Joules 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.

But I don’t think that all clothing retailers should be tarred with the same brush. Granted, retailers are operating in a very challenging trading environment, but it’s our job as stock pickers to separate the wheat from the chaff. I think there are quality companies out there that can weather the storm and continue to grow despite the current challenges facing the industry as a whole.

Global lifestyle brand

For instance, in its most recent trading update, global lifestyle brand Ted Baker (LSE: TED) announced that group revenue in the three months prior to the Christmas trading period rose by 7.3% (8% on a constant currency basis), compared to the same period last year. E-commerce figures in particular were very encouraging indeed, with an impressive 30.5% surge in sales compared to the prior year, representing almost a fifth of total retail sales.

Retail store sales as a whole increased by 5.1% on a constant currency basis, with average space rising 5.6% to 404,864 sq ft and expansion continuing with the opening of a new store in Oxford, plus further concessions in premium department stores in Canada, Germany and the UK. The group’s wholesale operation performed even better, with sales increasing 14.2% (15.4% at constant currency), reflecting strong performances from both its UK and North American businesses.

Solid business model

While the outcome for the full year will no doubt be heavily dependent on results for the all-important Christmas trading period, Ted Baker has proved once again that growth can still be achieved during challenging times when underpinned by a solid business model and an unwavering focus on product quality and design.

With the shares trading on a lower rating than in previous years, I consider Ted Baker a strong buy at 22 times current year earnings.

Growing customer base

Another fashion retailer that seems to have shrugged of the post-referendum blues is Joules Group (LSE: JOUL). Perhaps unfamiliar to those less fashion conscious individuals like myself, AIM-listed Joules is a founder-led premium British lifestyle brand, and is growing fast just like Ted Baker, although it is still in its infancy when compared to its larger peer.

In a pre-close trading update for the first half of its 2018 financial year, the Leicestershire-based retailer reported an 18.2% increase in revenue to £96.2m, reflecting the brand’s expansion, growing customer base (which now stands at more than 1m active customers”, and the strong performance of both new and core collections.

This is a business that appears to have found a strong niche and is defying an unforgiving backdrop in the fashion retail sector. Its move this year into activewear should help it tap into an area it hasn’t yet exploited.

The shares have suffered a slump since I last looked at the company back in June, and now look much better value trading on a price-to-earnings ratio of 25 for FY2018.

The post Investing in these 2 stocks could make you a millionaire retiree appeared first on The Twelfth Magpie.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Joules Group and Ted Baker plc. 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.

Unfortunately the firm’s shares fell by more than 25% on Wednesday after it was forced to issue a profit warning. This setback is due to a change in the tax rules governing such competitions. It seems that new tax rules mean that Best of the Best will now have to pay Remote Gaming Duty instead of VAT.

A sizeable hit

Helpfully, management has provided detailed guidance about the likely impact of the changes.

Pre-tax profit was £1.5m for the year ending 30 April. This is expected to fall to “not less than £1.4m” during the current year as the new changes take effect part-way through the year. A drop to “not less than £1.2m” is then forecast for the 2018/19 financial year.

I estimate this could be equivalent to earnings per share of about 12.7p this year and 10.9p next year, compared to previous broker forecasts of 13.1p and 13.7p per share.

Any good news?

There was also some potential good news. Best of the Best is currently in the process of trying to claim back £4.5m of VAT. That’s equivalent to 44p per share. If the claim succeeds, I’d expect some of this cash to be returned to shareholders.

Another potential positive is that the company now plans to buy back some of its shares from the market. Over time, this should help to support earnings per share and improve the firm’s ability to pay larger dividends.

My view

The change which triggered today’s warning looks like a one-off and does not appear to be the fault of management.

Given the group’s history of growth and cash generation, I’m inclined to take a fairly positive view of the shares.

A fashionable choice

Shares of fashion retailer Joules (LSE: JOUL) have drifted lower over the last couple of months, but at 268p the shares are still worth 37% more than when the group floated in May 2016.

This week’s trading update provided a fresh view on performance in a difficult market for retailers. Unfortunately, the company’s statement did seem to be a little short on detail.

Although we learned that sales grew by 18.2% to £96.2m during the six months to 26 November, no information was provided on like-for-like sales growth from its stores. As 10 new stores were opened in the period, it would have been useful if the group had broken out like-for-like growth and internet sales from this total.

On a similar note, I wasn’t sure what to make of the group’s outlook. Chief executive Colin Porter commented that “trading conditions will remain challenging” but said that the brand had “performed well” so far this year. On balance I suspect that results are expected to be in line with expectations.

On that basis, earnings per share are expected to climb by around 20% this year and in 2018/19. This gives the stock a PEG ratio of about 1.5, falling to 1.1 next year.

In my view these figures suggest the shares may be fairly priced at current levels. I’d rate the stock as a hold.

The post Should you consider falling knife Best of the Best plc after 25% drop today? appeared first on The Twelfth Magpie.

More reading

• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Roland Head 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.