Inflation continues to run rampant and hit consumers’ wallets hard. As such, I’ve been looking for stocks that have the potential to outperform the inflation rate, and Watches of Switzerland (LSE: WOSG) has caught my eye.

Luxury stocks clock in

There are several reasons to invest in luxury stocks during times of high inflation. The first is that customers purchasing luxury goods are usually least affected by inflation, given their financial position. The second is that retailers are able to pass on higher costs without impacting demand.

I imagine this to be the case for Watches of Switzerland. The company sells luxury watches and jewellery, while also providing servicing, repairs, and insurance services. It operates over 100 showrooms in the UK and 40 showrooms in the US. The FTSE 250 firm also operates through several transactional websites that include Goldsmiths, Mappin & Webb, Watches of Switzerland, Mayors Jewelers, and Betteridge brands.

Dazzling numbers

Keeping that in mind, the luxury retailer posted a rather robust set of numbers for its first quarter. Despite sales growth showing a slowdown, growth was still rather impressive for what I’d classify as a value stock. Shore Capital analyst Eleonora Dani echoed this sentiment as she described it as a “solid trading update“.

As a prospective investor, it’s nice to see broad-based growth across the company’s line of products. This was helped by continued improvement in its range of watches, but more notably, its jewellery. CEO Brian Diffy expects the strong momentum from Q1 to carry into Q2, and the rest of the year. Management even guided for the FTSE 250 company to finish the year strongly as it reiterated its outlook for its financial year.

Additionally, Diffy stated that the company’s products continue to show strength in demand, with client interest continuing to expand. Consequently, the trader will be focusing on attracting even more new clients and growing its market share in the UK and US. As travel across the Atlantic returns to pre-pandemic levels, this should serve as a tailwind, as all of its airport showrooms have now reopened.

Watch list

Although I’m no watch expert, the overall consensus seems to show that demand continues to strongly outstrip supply for luxury watches. And based on the latest results, the Watches of Switzerland management team has been showing its prowess by executing excellent strategic decisions while adapting to the tougher macroeconomic conditions.

With a rather steady balance sheet, boasting a debt-to-equity ratio of 33%, I think Watches of Switzerland is well equipped to continue its growth while remaining robust in the event of a recession. Therefore, I’m relatively confident that the firm’s share price can continue to perform. After all, it’s up 15% from its year-to-date low. Nonetheless, I’m slightly wary of the latest UK retail sales data, which showed non-food store sales declining 0.3% on a month-on-month basis, albeit still above 2019 levels.

Even so, this may not be truly indicative of the FTSE 250 company’s fortunes, given that it operates in a very niche market. So, with an average price target of £13.37, I’ll definitely be adding Watches of Switzerland to my watchlist for now and will be looking to purchase shares in the near future.

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John Choong 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.

April’s consumer price index has inflation pointing at 9%. With the FTSE 100 largely unmoved this year, not many of the index’s shares have managed to outperform the stock market. That being said, although 5% down this year, Burberry (LSE: BRBY) shares could be a potential hedge against inflation.

Luxurious inflation

The moat of luxury brands is their ability to thrive in high inflation environments. This is due to their inelastic demand and ability to pass on costs to customers. Higher prices are perceived as a status symbol, rather than a weight on the consumer’s wallet.

Burberry’s recent expansion in China shows how important diversification is in building a moat. While its European and Middle Eastern sales suffered last year from high inflation and Covid travel restrictions, its Chinese sales performed exceptionally well. Low inflation paired with an ever increasing number of consumer spending on luxury goods in China certainly helped the firm’s top line.

The yuan makes cents

The result of Burberry’s rapid expansion in China reflects in its income statement, as China is the company’s main revenue driver — Burberry has opened 224 stores in Asia Pacific. China’s increasingly affluent population is taking a bigger share in the world’s luxury market. In fact, the share of Chinese luxury consumer spending is now 21% of the global market, up from 11% just two years ago.

On the flip side though, China’s zero-Covid policy has resulted in several city-wide lockdowns. This has made growth volatile. Chinese sales figures were affected in Q4, with further impacts expected in this year’s first half.

Nonetheless, Burberry still posted positive results for the year. Despite the slowdown in China, both the firm’s top and bottom lines exceeded expectations. Additionally, Burberry gave a rather upbeat outlook for the year ahead. It expects revenue to grow at high single-digits, albeit with uncertainty surrounding China’s lockdowns. However, as China awakes from its lockdowns, I’m expecting the Burberry share price to recover and outperform the current inflation rate.

Long runway

Even though Burberry had a stellar year, I’m still wary of potential future lockdowns that could affect its share price. In spite of that, the retailer has shown its ability to outperform without the support of the Chinese market, as Burberry’s continued investment in digital channels has been vital to its success during Covid. I believe that Burberry has got a long runway of growth ahead with plenty of tailwinds for several reasons.

1. China is gradually lifting its lockdowns.
2. Travel is starting ramp up globally. As the brand generates a substantial amount of sales from tourists, this should help its top line.
3. The Supreme and Lola partnerships continue to attract more customers.
4. It introduced 47 new stores in FY 2022 with new concepts, and a further 65 planned for FY 2023.

Given these factors, I’m confident that the FTSE 100 share could turn green very soon. A modest price-to-earnings ratio of 17 and a decent dividend yield of 2.7% makes this stock a lucrative buy for me. As such, I’ll be looking to buy Burberry shares for my portfolio to hedge against inflation.

The post Can this FTSE 100 share hedge against inflation? appeared first on The Twelfth Magpie.

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John Choong has no position in any of the shares mentioned at the time of writing. The Motley Fool UK has recommended Burberry. 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.

After months of hand-wringing for investors, luxury label Burberry (LSE: BRBY) unveiled its new CEO — Jonathan Akeroyd — this morning. As a holder of the stock myself, I’m cautiously optimistic about the appointment and what it could mean for the Burberry share price in time. Here’s why.

Good fit

Thanks to the coronavirus crisis and the need to shut up much of its store estate around the world, the Burberry share price has been on something of a rollercoaster ride for holders. Just when investors thought it might be safe to come out from behind the sofa, the shock resignation of current boss Marco Gobbetti was announced in June. Since then, the stock has dropped almost 20% in value. 

The arrival of Akeroyd should give owners the stability they crave. Indeed, the Burberry share price is comfortably in positive territory today, suggesting that the market is generally receptive to the news. 

To be clear, the fit between Akeroyd and Burberry does look good, even if the number of suitable candidates to pick from for a job this elevated may have been rather limited. Before arriving at Milan-based fashion purveyor Gianni Versace in 2016, Akeroyd was CEO of Alexander McQueen for 12 years. His apparent enthusiasm to return to the UK also suggests the new leader intends to remain in the post for a good while.

Patience required

But let’s not get ahead of ourselves. Burberry’s new leader isn’t taking up the reins until next April. Gobbetti departs for Italian peer Salvatore Ferragamo in December with chairman Gerry Murphy taking charge over the interim period. 

Knowing this, I wouldn’t expect much in the way of detail on Akeroyd’s intended strategy until next Spring. That’s a good six months or so for the Burberry share price to potentially drift lower. This might be the case even if trading at the £7bn cap improves.

Of course, a share price fall could conceivably turn into a crash if wider-market concerns over supply chains or inflation intensify. A reintroduction of Covid-19 restrictions could also impact sentiment towards all stocks, particularly those that depend on discretionary spending.

As always, there’s no sure thing in investing. The only thing we can be sure of is that Akeroyd’s services aren’t coming cheap. A base salary of £1.1m and cash benefits of £50,000 is just the start. A potential bonus of £2.2m and £1.79m in share awards is also up for grabs. Let’s just say I’ll be looking for him to justify this remuneration from the off.

Quality stock

Having had a question mark hovering over the company for a number of months, I’m fairly reassured by today’s announcement. Notwithstanding this, I suspect it won’t be enough to help the Burberry share price recover to levels seen over the summer just yet.

No matter. As a Foolish investor, I know it’s vital to focus on where the company will be in years not months. This may include taking advantage of temporary share price dips such as the one Burberry has been experiencing. Management merry-go-round aside, I submit that this remains a classy, resilient company that should thrive again.

This is assuming, of course, it’s not taken out by a deep-pocketed suitor before long. Akeroyd’s got form here, having been at the helm when Versace was snapped up by Michael Kors (now Capri Holdings) back in 2018.

Whatever happens, it’s unlikely to be boring. 

The post Is the Burberry share price set to soar after its new boss is revealed? appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Burberry. The Motley Fool UK has recommended Burberry. 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.

“Significantly improved performance”

Today’s interim results do seem to suggest the luxury car-maker has turned a corner. Although in line with expectations, AML announced a “significantly improved performance” over the first half of 2021.

A total of 2,901 vehicles were sold, a rise of 224% on that achieved over the same period in 2020. Over half of these were DBXs – the company’s first foray into the SUV market.

Naturally, this improved AML’s top line. Half-year revenue more than trebled to just shy of £499m. As you might expect, the jump was particularly noticeable during the second quarter. After all, this period coincided with the first UK lockdown last year. Although still reporting a pre-tax loss of £90.7m, this was clearly far better than the £227m hit AML endured last year. 

There’s an indication this momentum will continue, which should be good news for the Aston Martin share price. Near-term demand for the firm’s current models looks to be solid and within forecasts. Indeed, the carmaker made very few changes to its full-year guidance with 6,000 vehicles expected to be sold. A target of 10,000 sales (and revenue of around £2bn) has been set for 2024/25.  

Still in the pits?

I reckon today’s numbers are as good as holders could’ve expected. News that manufacturing hasn’t been impacted by global chip shortages, at least so far, is encouraging. Recent highly-experienced additions to AML’s board, such as former Ferrari CEO Amedeo Felisa, further support the bull case.

Then again, it’s also important to put today’s results in context. Many businesses are reporting jumps in revenue as normality slowly returns. So, yes, AML’s figures are fine. However, I don’t think they can be regarded as exceptional.

At nearly £800m, the company’s level of net debt pile also remains an issue for me. Taking on debt isn’t always a bad thing but a robust balance sheet does allow a business to remain resilient when the tough times come. And whether it’s down to Covid-19 or another ‘known unknown’, you can be sure the market will be rattled by something sooner or later. 

Better opportunities

My dislike of AML wasn’t just due to the ludicrous valuation slapped on the company a few years ago. It was also due to vehicle manufacturers having a history of being pretty poor investments.

To paraphrase UK fund manager Terry Smith, things made from durable materials like metal tends to generate a lacklustre return because people tend not to bother replacing them during tough economic times. Whether this applies to a premium brand like AML is another thing, of course.

Based on the market reaction so far this morning, I suspect we may have already seen a bottoming in the Aston Martin share price. Even so, I can think of a huge number of other growth-focused, financially-sound companies I’d rather invest in right now.

And when it comes to buying a firm specialising in things that the majority of us can’t afford, there’s a far better option in the FTSE 100, in my view.

The post The Aston Martin share price has nearly doubled. Should I buy now? appeared first on The Twelfth Magpie.

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Paul Summers 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.

The Morrisons (LSE: MRW) share price has jumped on news of an unsolicited (and since rejected) £5.5bn takeover bid from US private equity firm Clayton, Dubilier & Rice. Time will tell whether we see a second bid for the UK supermarket chain. Perhaps a third party may enter the fray.

Regardless, I think we can safely say the UK stock market still looks an attractive hunting ground for opportunistic suitors. Here are two FTSE 100 companies that I think could receive interest in the near future.

FTSE 100 takeover target?

I’m naturally biased when it comes to ITV (LSE: ITV) because I own its stock. It’s also not the most creative of suggestions when it comes to potential takeover scenarios. The newly-promoted FTSE 100 firm has long been touted as a candidate following the miserable performance of its share price since 2015. If there’s a suitor running the rule over ITV however, I think time might be running out to get a great deal. 

Based on its most recent update, I expect advertising revenues at ITV to continue rising as the coronavirus is sent packing. This should then allow the company to kick-start its dividend policy. Such a move would surely attract income investors back, further supporting the share price.

Of course, this could take longer than expected and there’s an opportunity cost of not being invested elsewhere. However, the firm will benefit from showing the delayed Euro 2020 football tournament as well as the return of popular programmes such as Love Island in the meantime. 

For now, ITV trades on just 11 times forecast earnings. As normality returns, I’m starting to think it’s a question of ‘when’ not ‘if’ the company will be acquired.

In suitors’ sights?

Like ITV, luxury goods company and FTSE 100 peer Burberry (LSE: BRBY) is no stranger to takeover talk. Back in 2016, news leaked that the company had rejected numerous bids from US accessories brand Coach. However, I wonder if the £9bn-cap could become a target again after being thrown off course by the pandemic.

There’s certainly been no shortage of consolidation in the sector. For example, LVMH finally completed its acquisition of high-end jeweller Tiffany & Co at the beginning of 2021. It wouldn’t surprise me if the French luxury goods group began sniffing around Burberry. I’m not alone in thinking that more takeover activity in this space looks likely post-Covid-19.

Trading at 26 times forecast earnings, Burberry isn’t as cheap as ITV. This could imply that the shares carry more risk because recovery is priced in. Then again, this valuation certainly hasn’t stopped top UK fund manager Nick Train from recently upping his stake in the former. 

Buy to hold

This is all speculation on my part. While it would be lovely to experience similar leaps to that seen in the Morrisons share price, I’d never buy into a company purely in hope of a takeover. No, I’m only interested in making investments that I’d be content to sit on for years. With their high returns on capital, strong brands, and sound finances, ITV and Burberry fit this bill nicely. 

It remains to be seen whether a deal for the aforementioned supermarket is struck. However, some holders may bank some profit anyway. The Morrisons share price performance wasn’t exactly stellar before yesterday. Momentum could always dissipate if that second bid doesn’t materialise soon.

The post After Morrisons, will these FTSE 100 stocks be next to receive bids? appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Burberry and ITV. The Motley Fool UK has recommended Burberry, ITV, and Morrisons. 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.

Does a boardroom shake-up and fresh cash change things? Not in my view.

Steer clear of Aston Martin’s shares

I’ve no issue with the quality of what Aston Martin produces. But this seems to be the heart of the problem: beautiful cars, blooming awful investment.

Could we have seen the share price collapse coming? I think so. In its 107-year history, the company has gone bankrupt seven times. This suggests there is something utterly flawed about this business, regardless of who is in charge. It feels important to mention this record given the market’s positive reaction to the news that CEO Andy Palmer is to be replaced by Tobias Moers.

Let’s not underestimate the size of the task facing Mr Moers. Sales of cars had already pretty much halved in the first three months of 2020 compared to last year, forcing the company to report a pre-tax loss of near-£119m!

Yes, a looming recession is unlikely to stop those actually capable of buying the cars from doing so, but the firm’s tendency to burn through cash is sufficient to make me think that moving into a higher gear may take a very long time, if it happens at all.  The recent securing of £500m in emergency funding will help, but it may not be enough to get the company really motoring. 

Good money will have been made on Aston Martin shares in recent days. Despite this, I’m concerned that this momentum may be lost as traders bank profits and drive away. Buyers beware!

A better Foolish bet

If you’re in the market for a luxury brand right now, I’d opt for a company with a better track record of making money for its owners. While admittedly biased (I hold the stock), I think FTSE 100 giant Burberry (LSE: BRBY) is a great example.

Now, don’t get me wrong — I’m not saying that Burberry isn’t in a tight spot itself. Like a huge number of businesses, the company has seen sales falling off a cliff thanks to the coronavirus pandemic. Guidance on FY21 numbers has been pulled, dividends have been shelved and the company has had to find additional ways of saving cash where it can. 

But contrast Aston’s pre-virus performance with that of Burberry. Trading at the latter before the outbreak was strong with sales in the year to 28 March “ahead of expectations“. It also reported having £887m in cash on the balance sheet a week or so ago.

Sure, things could be difficult for a while. Another market crash certainly isn’t beyond the realms of possibility. At 26% below its mid-February price though, I’d say at least some of this bad news is priced in. This is why I’ve been adding to my holding over the last few weeks.

Given that sales of luxury goods tend to recover quickly from recessions, I’m confident that Burberry can emerge a stronger company. There could be some volatility yet to come, but those intent on holding for years rather than months should still end up with a great result.

The post Forget Aston Martin shares! I think this FTSE 100 stock is a far better buy appeared first on The Twelfth Magpie.

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Paul Summers owns shares of Burberry. The Motley Fool UK has recommended Burberry. 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.

Reckitt is in transition

Four percent underlying earnings growth is not what many investors would expect from a stock which trades at a price-to-earnings ratio of 25.4. You’d expect much faster growth from a stock with such a high valuation multiple — but 4% is exactly what consumer goods company Reckitt Benckiser (LSE: RB) delivered last year. The company’s recent growth has been falling short of analysts’ expectations, and its more recent Q1 trading update didn’t show much signs of improvement — group like-for-like sales were flat on the same period last year.

Management hopes that the company’s acquisition of leading baby foods manufacturer Mead Johnson will revive like-for-like growth. It’s also conducting a “strategic review” of its non-core food business, which could lead to a possible sale of the business. A sale would help it to reduce debt, increase exposure to emerging markets and allow it to focus on its faster-growing brands. Reckitt’s food division, which includes French’s mustard and Frank’s Red Hot sauce, is estimated to be worth as much as £2.4bn.

However, Reckitt’s transition brings uncertainty. Its entry into the infant nutrition business adds an entirely new category to the company, and it will likely face a tough challenge to deliver on the all-important revenue and cost synergies from the merger. And even if it succeeds on the merger front, management cannot afford to ignore the poor trading momentum at its core business — it would also need sales to pick up at its existing business.

Additionally, valuations seem stretched. Even after taking into account the acquisition of Mead Johnson, shares in the company trade at 22.4 times expected earnings this year (falling to a still pricey 21.5 times by 2018). This compares unfavourably to its five-year historical average multiple of 19.6 and the sector peer average of 20.5.

Although Reckitt is a solid big brand business, its shares seem to have got ahead of themselves. Its transition carries significant risks and this could mean that there’s a lot of uncertainty surrounding the company’s earnings growth outlook.

Burberry continues to disappoint

Like many companies that are big dollar earners, shares in luxury goods firm Burberry (LSE: BRBY) rallied sharply after the UK voted to leave the European Union. However, despite the benefit of improved sterling earnings translation and an impressive performance in the UK, sales growth for the fashion group continues to disappoint investors.

Sure, it’s not all doom and gloom — Burbery has undergone some big senior management changes, with luxury retail veteran Marco Gobbetti due to take over the helm of the company. Many analysts believe his appointment would help the company to boost its retail productivity, leverage its e-commerce opportunities and improve free cash flow.

However, I reckon that Burberry’s stock is also buoyed by shorter-term factors such as sterling’s recent weakness, share buybacks and its latest dividend increase. At a current price of 1,752p, Burberry shares trade at 21.9 times the consensus analyst forecast for underlying earnings per share of 80.1p this year. That’s a big premium to the sector average of 17.5, which seems to me unwarranted given its recent disappointing sales figures and weak earnings outlook.

The post Are these FTSE 100 growth stocks getting too expensive? appeared first on The Twelfth Magpie.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has recommended Burberry and Reckitt Benckiser. 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.

The key reason for increased investor positivity is the ambitious expansion plan that saw the group open nine new directly owned stores in 2016 as well as convert 16 older stores into its new concept store layout. Compared to larger rivals such as Burberry, Jimmy Choo still has plenty of room to continue growing its footprint as it only had 150 directly owned stores at the end of December.

The company also has a few other interesting growth levers available to it as online sales only represented 6% of total sales at year-end and men’s product was less than 10% of revenue in H1. Furthermore, developing Asian markets are still largely untapped with only 15% of H1 sales coming from non-Japanese countries in the region.

While Chinese luxury sales have been negatively affected by the government’s anti-corruption drive in the short term, this huge and increasingly wealthy market should be a tempting target for Jimmy Choo in the long term.

The downside for potential investors is that the company’s shares currently trade at 23 times forward earnings, which suggests the valuation has already taken account of significant future growth. Another issue to keep an eye on is the fact that like-for-like sales reversed 1% in 2016 due to challenges in the US and the temporary closure of several flagship stores for refurbishment. While these are hopefully short-term issues, interested investors should keep a close eye out for a return to organic growth in the coming quarters.

Driving shareholder returns higher

Global car distributor and dealership group Inchcape (LSE: INCH) represents luxury brands from Rolls-Royce to Porsche and Jaguar. A new CEO coming on board with ambitious expansion plans has helped send shares of the company up over 9% in the past year to their current 739p price.

Despite five straight years of earnings growth, shares of the company currently trade at a sedate 13 times forward earnings, which is reasonable considering the cyclical nature of the luxury auto market.

However Inchcape is less cyclical than many pureplay car dealerships as 78% of the group’s trading profits last year came from its distribution business. This segment imports and exports vehicles, takes care of the distribution and works with OEM partners to source after-care parts. The 9.9% profit margins the distribution business posted last year are also much higher than the 1.9% margins from the retail network.

The company’s healthy balance sheet also means it can take advantage of any downturn to make strategic acquisitions at attractive prices. We’re already seeing this in action as weak trading in Latin America allowed Inchcape to purchase the leading distributor of Subaru and Hino vehicles in December for a relatively cheap £234m, or 8.6 times full-year EBITDA.

Inchcape certainly isn’t immune from any downturn in the global auto market but its high-margin distribution business, a healthy balance sheet and well-covered 2.8% yielding dividend still make it an interesting stock I’ll be keeping a close eye on.

The post 2 top luxury stocks trading for under a tenner appeared first on The Twelfth Magpie.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK has recommended Burberry. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Furthermore, the incident is likely to have caused a drop in customer loyalty and in the prospects for sales growth in the short run. Although the impact of the incident in this regard is impossible to accurately measure, competition within the quad play space is high and it’s relatively straightforward to switch supplier. As such, Talktalk may have lost some of the momentum it had enjoyed from it stealing a march on rivals regarding the diversity of the products it offered.

Looking ahead, Talktalk is forecast to increase its bottom line by 44% in the next financial year. Certainly, there’s scope for a downgrade due to the potential impact of reduced customer loyalty. But with the company’s shares trading on a price-to-earnings growth (PEG) ratio of only 0.3, the risk/reward ratio remains appealing. Due to this wide economic moat, Talktalk appears to be a strong buy despite the relatively high degree of uncertainty regarding its near-term future.

Mulberry – set for growth

Also struggling in recent years has been luxury brand Mulberry (LSE: MUL). It has suffered from implementing price increases that priced out its traditional customer base and now that it has returned to a less ambitious pricing structure, its bottom line is set to reap the rewards.

In fact, Mulberry’s earnings are due to rise by 74% in the current financial year, followed by further growth of 111% in the next financial year. As such, Mulberry trades on a rather appealing PEG ratio of 1.1, which indicates that its shares could be worth buying at the present time.

And with the company’s new Creative Director set to show his first Mulberry collection at London Fashion Week in February, investor sentiment could improve during the year and push the company’s shares higher following their 14% rise over the last year.

On your shopping list?

Meanwhile, the outlook for Tesco (LSE: TSCO) is also upbeat. Clearly, the pending Christmas update could have a significant impact on the company’s short-term share price movement, but looking further ahead Tesco is expected to increase its net profit by 78% in the current year. This puts it on a PEG ratio of 0.2 and indicates that share price growth is likely.

Undoubtedly, Tesco is set to benefit from an improved outlook for UK consumers who are enjoying wage rises in real-terms for the first time in a handful of years. However, the company’s refreshed strategy, which focuses on efficiencies, customer service and a simplified business structure, is also likely to have a positive impact on its financial performance.

With Tesco having a yield of 1.2%, it lacks income appeal at the present time. But with a payout ratio of only 18%, there’s scope for a rapid rise in shareholder payouts in the medium-to-long term – especially if Tesco’s earnings can continue to increase at a fast pace.

The post Tesco PLC, Talktalk Telecom Group PLC And Mulberry Group PLC: Are They On The Cusp Of Stunning Returns? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of TalkTalk Telecom Group plc and Tesco. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.