Online sales rocket

Let’s start with the good stuff. Full-price sales were up 17% in the 13 weeks to 30 October, compared to the same period in 2019. This brings growth in the year-to-date to 11.2%, compared to the year that preceded the pandemic.

Personally, I find this comparison far more helpful in judging Next’s performance. With its multiple lockdowns and forced store closures, 2020 was just too much of an anomaly.

As you would expect, Next’s digital offer continues to see strong momentum relative to its retail stores. Total online sales in Q3 were up 40% versus 2019/20 while the latter fell by just over 6%.

This difference becomes even starker when sales figures for 2021-to-date are highlighted. With just three months to go before the end of Next’s financial year, online sales are already up 49.5% on 2019/20. By sharp contrast, retail sales have plummeted 28.8%.

If this doesn’t show just how popular shopping from the sofa has become (and how important it is for any retailer to get their digital offering right), I don’t know what will. 

So why is the Next share price falling?

It seems to be down to the company’s cautious outlook. Today, Next said that it wasn’t expecting recent trading momentum to continue into Q4, even though sales in the last five weeks of Q3 rose 14%. This was a far better result than the 10% growth management had previously forecast.

In line with keeping its feet on the ground, the FTSE 100 constituent elected to keep guidance on full-price sales unchanged at 10.2% for November to January. It also raised guidance on full-year sales only very slightly. Pre-tax profit of £800m over the 12 months is still expected. That would be a 6.9% improvement on 2019/20.

Rather helpfully, Next provided a host of reasons to back up its projections. These include the possibility that demand will reduce now that people have already satisfied their post-lockdown spending desires. The inflationary environment — and the need for consumers to prioritise essential goods over discretionary spending — won’t help matters either.

Like many other businesses, Next also mentioned that stock availability “remains challenging” due to supply chain issues and labour shortages. Further investment in digital marketing is on the cards too. 

This all looks very prudent to me. I’d far rather a company under-promise and over-deliver (which Next has a tendency of doing). As updates go then, I don’t think there’s anything new for holders to worry about. The question is, are the shares good value?

Good value

Up 40% over the last 12 months, Next stock now trades on 16 times earnings. That doesn’t feel excessive, in my opinion. Then again, I suspect the reasons cited in today’s statement make it more important than ever to ensure that I am properly diversified if I were to begin building a position today.

I’d also need to be confident that the company can hold its own in the run-up to the festive period if the share price isn’t to lose steam early in 2022.

Considering the headwinds it has faced lately, Next continues to impress. As retailers go, I suspect there are far worse options out there. It’s a cautious ‘buy’, in my book.

The post The Next share price falls despite strong sales. 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.

Bearish trajectory

I think there are two main reasons why the Boohoo share price is falling. Firstly, the company has seen a number of allegations about underpayment of workers in its supply chain. In December 2020, the Guardian reported that in a Pakistani factory, workers were paid just 29p an hour to manufacture Boohoo garments. Similar cases have plagued Boohoo throughout 2021.

In addition to this, the company is fighting a £100m lawsuit over misleading advertising. I think the constant ESG battles Boohoo seems to face is beginning to turn investors sour. Unless it can begin to solve these issues, I think the Boohoo share price has further to fall in the future.

Secondly, the spike in growth for 2020 seems to have slowed throughout 2021. I would expect this to be the case, as pandemic restrictions ease and people spend more time in physical stores rather than shopping online. Boohoo reported a 40% rise in revenues for 2020. However, the growth forecast for 2021 is 25%. I think this is another reason the Boohoo share price has been falling in recent months.

Reasons to be optimistic

That being said, there are a number of reasons why I think the Boohoo share price could rise in the near future. The company’s net cash position looks healthy at just under £200m, which is encouraging, considering its recent acquisitions that have included Karen Miller, Oasis, Debenhams, and Dorothy Perkins. These acquisitions also help Boohoo add vital market share, which will help ward off competition and increase revenues.

Despite this, the group’s margins have stayed strong. Revenues rose from £195m in 2016 to £1.4bn in 2020. Over the same five years, profits rose from £15m to £91m representing margins of just under 10% in both years. This shows me the firm can stay consistently profitable, even while massively scaling up operations. This fact, coupled with the recent acquisitions, gives me confidence for the future of the share price.

Boohoo share price: The verdict

If Boohoo can get some of its ESG problems in check, I think the group has a bright future ahead of it. The current P/E ratio of Boohoo is 29.5, which is over half its five-year average. Therefore, I think the current Boohoo share price offers some good value.

For me, the fact that margins have stayed in check despite the ambitious expansion, is the most encouraging factor. This coupled with a historically lower valuation makes me think Boohoo could be one of the hottest UK retail stocks to add to my portfolio today.

The post The Boohoo share price is falling. Should I buy now? appeared first on The Twelfth Magpie.

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Dylan Hood has no position in any of the shares mentioned. 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.

Takeover bids

The recent Morrisons takeover news has brought a new focus on the UK supermarket industry. US private equity firm CD&R were pitted against competitor Fortress in a bid to buy Morrisons. This helped drive the Morrisons share price to all-time high territory.

This has been good news for the wider industry, with Sainsbury and Tesco both seeing share price increases of 5% and 10% in the past month.

Is Sainsbury the next target?

The Sainsbury share price leaped 15% when markets opened on 23 August. This seemed to signal investors believed Sainsbury could be a viable acquisition opportunity.

Looking at the current value of Sainsbury shares I believe there is a case for this. Shares are currently sitting at 303p and trading off a price-to-sales (P/S) ratio of 0.24. Competitors Tesco and Morrisons trade off slightly higher P/S ratios of 0.34 and 0.40 respectively. Sainsbury’s shares seem to offer good value here, an appealing attribute for a theoretical acquirer.

Looking at market shares, Sainsbury holds 16% of the UK market. This is significantly below Tesco’s 27%, but also above Morrisons’ 10%. This places Sainsbury as the second-largest company in its market.

The enterprise value (EV) of Sainsbury is also encouraging for the acquisition case. EV is a measure of the market cap plus net debt. This is essentially a figure of how much you would need to pay to acquire the business. Sainsbury’s EV is currently $13bn, not far off of Morrisons’ £10bn. Tesco on the other hand currently boasts an EV of £31bn. With Fortress and CD&R having total assets under management of £35bn and £16bn, respectively, I couldn’t see either of them bidding for Tesco. This leaves Sainsbury as a much more viable choice.

Therefore, I think there is a case for the acquisition of Sainsbury. This would undoubtedly lead to an explosion of the Sainsbury share price.

Long-term outlook

The most recent results are likely to have helped the Sainsbury share price too. Total retail sales were up 7.3%, and digital sales up 102%, now combining to 42% of total orders. Online shopping has been amplified because of the pandemic, with many people now sticking to shopping online. The fact that this part of Sainsbury’s business is so strong gives me confidence for the future.

Overall, I think it is fair to say an acquisition is viable. This could lead to an increase in the Sainsbury share price. However, I don’t like to base my investments on theoretical events – I don’t want that risk for my portfolio. I still think Sainsbury could prove a good long-term investment, but I won’t be buying any shares today.

The post Is the Sainsbury share price about to explode? appeared first on The Twelfth Magpie.

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Dylan Hood has no position in any shares mentioned above. The Motley Fool UK has recommended 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.

Tesco share price interest

As I referenced in a previous article, competitor Morrisons has accepted a £7bn bid from US private equity firm CD&R. The bidding war for Morrisons led to its share price soaring over 60%. This interest seems to have rubbed off on the wider supermarket industry, with Sainsbury’s and Tesco also seeing their shares jump 5% and 10% in the last month, respectively. Any takeover speculation is likely to benefit Tesco shares, even if an acquisition never comes to fruition. 

Not that the share price has been on an uninterrupted upward trajectory. The Tesco share price fell sharply in February, but it wasn’t anything to worry about. In early 2021, it announced a special 50.93p dividend would be paid to investors. This was made possible by the £5bn sale of its Asian businesses. The shares fell almost 30% in the process as it performed a share consolidation. This meant 15 new shares were issued for every 19 existing ones — and investors became £5bn richer in the process. 

Tesco currently boasts a healthy 3.91% dividend, significantly higher than the FTSE 100 average of 3.3%. This would make Tesco a great income addition to my portfolio, I feel, and is another reason I like the stock. 

Brexit problems

There are risks, however. Brexit food shortages have been exacerbated by the pandemic. This has sparked fears of increasing future food prices. In July, the British Retail Consortium (BRC) shop price index showed that average food prices had declined 0.8% year-on-year. However, BRC Chief Executive Helen Dickinson added that “rising commodity prices and Brexit red tape” were creating an unsustainable price environment for the UK supermarket sector. Moving forward, this could be a problem for Tesco shares.

In addition to price problems, the HGV driver shortage is putting increased strain on the sector. Analysts have estimated a shortfall of 90,000 drivers could lead to food shortages during Christmas and into 2022. This will inflate prices further and could also damage the Tesco share price.

A cheap buy?

Tesco shares are currently trading at a P/E ratio of 19x, significantly above the FTSE 100 average of 15.8x. However, I expect this number to drop if Tesco is able to meet its earnings targets for the quarter. It reported a 13% increase in like-for-like sales in Q1, which should help drive up earnings. 

Aside from this, the UK supermarket sector is a good defensive play, I feel. People will always need food. Although Brexit is already causing problems, I don’t believe these will be too heavily reflected in share prices. Overall, although don’t think Tesco shares will make any crazy gains in the near future, I like Tesco as a solid income option for my portfolio.

The post Should I buy Tesco shares today? appeared first on The Twelfth Magpie.

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Dylan Hood has no position in any shares mentioned above. The Motley Fool UK has recommended Morrisons and Tesco. 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 outbreak of the pandemic saw a major rise in the Ocado (LSE: OCDO) share price. However, since hitting an all-time high of 2,914p in February, it has fallen and is currently around 35% lower. Back in March, my fellow Fool Manika Premsingh explained why she was buying Ocado. So does this FTSE 100 stock’s share price still have the potential to rise as we seem to be coming out of the pandemic? Let’s take a look.

Ocado opportunities

The first positive is that the pandemic has changed consumer behaviour. At its height, many people switched to online grocery shopping. By August last year, more than three-quarters of consumers ordered at least some of their household shopping from supermarket websites. And I suspect many will continue to shop online, which provides opportunities for the Ocado share price to rise.

This view is reinforced through the firm’s latest financial results. The half-year results for 2021 showed 21.4% growth in revenue to £1.3bn, highlighting the continued strong performance of the business. It also found itself with what it called ‘’healthy liquidity’’, with a cash balance of £1.7bn. This provides stability, possibly giving investors confidence about the future. However, it’s worth noting that pre-tax losses were around £24m. Since its creation, it has rarely made a profit, which does lead me to question whether Ocado is currently overpriced. 

One key point in its favour compared to other grocers that operate online is its customer fulfilment centres.  These allowed Ocado to outperform rivals during the pandemic. Rivals could not always cope with the high demand, but Ocado’s automated systems streamlined the preparation of deliveries. Innovations like this make me optimistic for the future of the business.

Ocado share price risks

Of course, despite the potential I see, I have to consider the risks too. One major potential risk is a lawsuit the firm’s currently involved in. Norwegian robotics company AutoStore has filed complaints in the UK and US claiming Ocado’s automated warehouse systems infringe its patents. A successful lawsuit would block the import, manufacture, sale, and use of these systems. Sorting out the legal situation will inevitably be a long process, costing the firm money along the way. I believe this could be a reason behind the fall in the Ocado share price and I’m wary that the longer the lawsuit goes on, the more it may continue to fall.

To add to this, the grocery market is becoming more competitive, which could pose problems. Supermarket chains like Tesco boosted home delivery in the pandemic, while Amazon has also ventured into grocery with Amazon Fresh. This could have a massive impact on future revenues as these operations potentially poach the firm’s customers, directly impacting the Ocado share price.

Should I buy Ocado?

I like Ocado, and don’t believe that the sole reason for the rise in share price over the past few years is due to the pandemic. It’s an innovative business model with strengthening financial results. So why is the Ocado share price falling? I pin it down to the lawsuit and that means I won’t be buying yet. I may be missing out on a great opportunity, but I intend to keep Ocado on my watchlist until the outcome of the lawsuit is clearer.

The post The Ocado share price has fallen: should I buy now? appeared first on The Twelfth Magpie.

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Charlie Keough does not own shares in any of the mentioned companies. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Ocado Group and Tesco and has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. 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.

Bullish on Boohoo

The capture of Debenhams looks sound for a few reasons. First, it shows the level of Boohoo’s ambition. By marking its foray into new markets — beauty, sports and homewares — the company can’t be accused of resting on its laurels. Developing “the UK’s largest marketplace” should ensure it reaches an even wider audience with an increasing number of brands. On top of this, the Debenhams acquisition also gives Boohoo another route to selling its own clothes. These now include more ‘mature’ labels such as Oasis and Coast as well as the hyper-popular PrettyLittleThing. 

Then there’s the price tag. For £55m, the Manchester-based business will adopt and relaunch a website that receives 300 million or so visits per annum. It also made roughly £400m in revenue last year. When one considers that Boohoo isn’t taking on the burden of any of the physical stores or stock, that looks like a blinding deal. 

Other attractions

Another reason for me thinking Boohoo’s share price could rise over the next few years relates to the current valuation. A price-to-earnings (P/E) ratio of 32 looks increasingly reasonable for a company making money hand over fist, even during a pandemic. The argument becomes even stronger to me when it’s considered that many loss-making companies across the pond are trading at bubble-like prices. 

Evidence of a speedy fix to the supply chain problems that dogged the company last year should add more pennies to the Boohoo share price. In fact, the Environmental Social Governance (ESG) funds that were quick to dump their holdings may suddenly find themselves needing to pay a far higher price to buy back in. 

So, Boohoo is bulletproof?

I wouldn’t go that far. While bullish on the AIM-listed star’s future, I also think it’s vital to speculate on what may go wrong.

For one, Boohoo’s growing list of brands could become problematic. As competent as management appears to be at integrating acquisitions, there’s a risk it may be attempting to spin too many plates too soon.

There’s also a possibility that Boohoo might lose its popularity among its key demographic, namely young women. Fashion is a truly fickle industry. There’s only so far savvy marketing and a strong social media presence will take you.  

As far as the shares are concerned, Boohoo could even fall victim to a flight to value in the near term. This wouldn’t be unreasonable. Some high-quality, high growth UK stocks made investors rich in 2020. The Boohoo share price has doubled since the dark days of March 2020. Some eventual profit-taking is inevitable.

Just the start

But ultimately, where the Boohoo shares go in the next few weeks and months is irrelevant to me. As a long-term holder, I place more importance on the company taking advantage of opportunities now to reap the rewards later. The Debenhams deal is a good example of this. In fact, I’d be surprised if further acquisitions weren’t announced soon. Without a doubt, Boohoo has the cash to splash.

The post Here’s why I think the Boohoo share price is just getting started appeared first on The Twelfth Magpie.

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Paul Summers owns shares in boohoo group. 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.

Is my long-held suspicion that the shares are overbought finally ringing true, or is this a mere short-term blip?

Ocado sales soar

This morning’s numbers relate to Ocado’s retail arm — the joint venture it formed with battered former FTSE 100 member Marks & Spencer back in February 2019.

Thanks in part to another lockdown, retail revenue soared 35% over the 13 weeks to 29 November to just under £580m. According to the company, this compares favourably to the normal peaks and troughs experienced before the coronavirus arrived. It also suggests customers have been receptive to the firm’s switch in trading partners, to M&S from Waitrose in September.

Ocado received an average of 360,000 order per week over the period — up 3% from Q4 2019. Despite the additional demand, it was able to achieve “high rates of on-time customer delivery and low rates of substitutions,” according to Retail CEO Melanie Smith. The average order size was £133 — evidence, Ocado believes, that shoppers’ behaviour was continuing to “normalise.“

Priced in?

It seems fair to say Ocado shares have been one of the better FTSE 100 buys in 2020. Those placing the stock in their shopping basket at the beginning of January would be sitting on a gain of around 75%. That’s after taking today’s fall into account! The question is, how much of this good news is now priced in?

Based on this morning’s reaction. I’d say quite a lot, especially as the company raised earnings guidance again today. It now expects full-year earnings to be “over £70m” compared to its previous prediction of over £60m. And yet traders weren’t impressed!

Part of this may be explained by the fuzzy outlook. Within today’s statement, Ocado said sales and earnings growth in the next financial year will depend on how quickly trading normalises. It’s also dependent on when three new warehouses become operational. These are expected to add 40% more capacity to the business.

Market minnow

But is this reaction really that surprising? After all, Ocado is still trading at a loss, due to the huge investment it’s needed to make over the years. As impressive as its operations are, the FTSE 100 company is already valued at over £17bn. That’s the sort of staggering valuation we’d expect from flash (overhyped) US tech stock. Sure, Ocado might utilise market-leading software, but no share is worth buying at any price. 

On top of this, it’s worth remembering Ocado doesn’t operate in a vacuum and the grocery market remains as cut-throat as ever. Depending on how the UK economy fares in 2021, it’s possible more people will switch away from M&S to cheaper options out of necessity.  

It’s not as if Ocado has a commanding presence either. In November, it had just a 1.7% share of the UK market, according to Kantar. FTSE 100 peer Tesco, on the other hand, had 27%. Its valuation is £22bn — only £5bn more than Ocado. 

Considering the above, I’m still giving Ocado shares a wide berth as an investor. For me, there are far better opportunities elsewhere in the market. The bubble may finally be bursting.

The post Ocado shares are falling today. Is this FTSE 100 firm’s bubble finally bursting? 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.

Even so, this return is nothing compared to what investors could have made through careful stock-picking. Unsurprisingly, some of the biggest winners since March’s market crash have been in the small-cap arena.

Today, I’m looking at a personal favourite — online musical instrument seller Gear4music (LSE: G4M). Shares in the business are up a stunning 400% in the last eight months. Based on today’s set of interim results, it’s not hard to see why. 

Lockdown beneficiary

At £70.2m, revenue was 42% higher over the six months to the end of September than that achieved over the same period in 2019. Gross profit also soared — by 61% — to £20.1m. 

This isn’t exactly a surprise. When lockdowns were enforced in March, many of us were forced to entertain ourselves in the comfort of our own homes — a perfect scenario for companies selling products such as video games, books and, yes, musical instruments. As a consequence, Gear4music had 403,000 new customers making purchases over the six months — a 52% improvement on the previous year. 

All told, a record net profit of £4.9m for the period was reported. This compares favourably to the £0.1m loss over the same period in 2019. 

But will this form continue?

Will these impressive gains be maintained? I think so. In fact, I remain bullish on Gear4music from both a near-term and long-term perspective.

While one would suppose that many budding musicians will already have most of what they need during the second UK lockdown, news that trading in November “continues to be very strong” would suggest otherwise.

Of course, it could be that people are simply cautious on lockdown restrictions actually being lifted and are getting their Christmas shopping done online instead. Regardless, those already owning the shares will likely be encouraged by news that results for the full year are now predicted to be ahead of market expectations, which were only recently upgraded. Not many FTSE 100 constituents are saying this right now!

On a longer time horizon, the signs look equally positive. As CEO Andrew Wass commented today, more people now “appreciate the benefits that playing and creating music can bring.” Moreover, the fact that mastery of an instrument takes a long time could play into the company’s hands.

The ongoing growth in online shopping should also be good news, albeit at the expense of independent retailers on the high street. I suspect many of the latter will become casualties of 2020 and shut up shop for good.

With European hubs and distribution networks already up and running, negotiating Brexit shouldn’t be an issue either.

FTSE 100 beater

There’s certainly nothing wrong with owning a FTSE 100 tracker or exchange-traded fund. This is particularly the case for those who have little interest in the stock market. Over the long term, anyone adopting this strategy should do well so long as they reinvest the dividends they receive.

But I remain a huge advocate of buying shares in promising small-cap UK companies that can grow revenue and profits far quicker than your typical FTSE 100 giant.

For me, Gear4music continues to hit all the right notes. 

The post Forget the FTSE 100. This UK small-cap share is up 400% since markets crashed! 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.

Can ASOS’s share price continue to move higher? Plenty of analysts believe it can. In fact, some of them believe the stock can move considerably higher.

ASOS share price: 5,000p target price

In the last week, two major brokerage houses have increased their target prices for ASOS shares.

On Thursday, analysts at Credit Suisse lifted their target price from 3,600p to 4,100p. And then on Friday, analysts at Peel Hunt increased their target price from 3,000p to 5,000p.

It’s the latter broker target price upgrade that stands out to me. Not only is it an increase of a huge 67% (which you don’t see that often), but it’s also nearly 50% higher than the current share price. Clearly, Peel Hunt analysts are bullish on ASOS shares.

Now, I don’t have access to any research notes from Peel Hunt, so I can’t tell you the exact reason they expect ASOS shares to keep rising. However, I can think of a key reason why they’re so bullish right now.

Online shopping is booming

In the wake of the coronavirus, we’re seeing a real acceleration in the shift towards e-commerce.

Indeed, according to analysts at Bernstein, the growth rate of online fashion looks set to triple this year to account for 23% of European fashion sales. Before the coronavirus pandemic, this level of online sales was not expected until 2024.

“The sudden closure of all apparel retail stores across all major global markets has shaken up the channel mix in an unprecedented way this year,” said Bernstein analyst Aneesha Sherman recently. “Five years’ worth of growth achieved in about six months,” she added.

This surge in online shopping is reflected in the trading updates issued by some of ASOS’s major competitors recently.

For example, last week, Europe’s largest online fashion retailer, Zalando, said it was expecting a big increase in second-quarter sales and operating profit.

Meanwhile, UK rival Boohoo advised last week that it would top market expectations for profits and sales again this year after first-quarter results showed revenue growth of 45%.

Looking ahead, online fashion sales as a percentage of total fashion sales is likely to continue increasing. Bernstein analysts believe that by 2030, online fashion sales could rise to nearly 40% of fashion sales.

This means well-established online retailers such as ASOS are well-placed for growth.

I’m bullish on ASOS shares 

Personally, I’m pretty bullish on ASOS shares myself. Okay, I’ll admit the valuation on the stock is high. Currently, ASOS shares trade on a forward-looking P/E ratio of around 65. That does add risk to the investment case. 

However, I see big potential here in the long run. My belief is that in a few years’ time, ASOS’s share price will be much higher than it is today, thanks to the relentless growth of e-commerce.

The post ASOS share price: can it keep rising? appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in ASOS and Boohoo. 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.

And looking ahead, the trend is expected to continue. According to industry experts, internet sales could account for over 50% of total UK retail sales by as early as 2028.

For investors, the growth of online shopping is likely to present many opportunities in the years ahead. With that in mind, here’s a look at some UK online shopping stocks that could help you gain exposure to this growth story.

Source: ONS

Online shopping stocks: pure online retailers

If you’re looking for online shopping stocks, the best place to start is generally pure online retailers. These are companies that only sell goods online. Many of the world’s largest pure online retailers such as Amazon and eBay are listed in the US. However, there are still plenty of opportunities for investors here in the UK.

One example is Ocado. It’s an online supermarket that describes itself as the ‘world’s largest dedicated online grocery retailer.’ It also specialises in helping other supermarkets with warehouse automation. 

There’s also ASOS and Boohoo, which specialise in online fashion. These companies, which sell a massive variety of clothing online, have both registered prolific revenue growth over the last five years. 

Additionally, there are niche online retailers. One example is Gear4music, which sells musical instruments online. It’s another company that has grown rapidly over the last few years.

Retailers that sell online

‘Omnichannel’ retailers that sell a proportion of their goods online could also potentially be worth considering. One that has seen solid growth in online sales recently is JD Sports Fashion, which mainly sells trainers and athleisure clothing. Major supermarkets such as Tesco and Sainsbury’s (which owns Argos) have also experienced strong online growth in recent years.

Warehouse and logistics companies

Retailers are not the only online shopping stocks you can invest in, however. The e-commerce industry is made up of many different subsectors, meaning there are plenty of other ways to get exposure to the theme.

One area that could be worth considering is warehouse and logistics companies. These types of companies appear well placed to benefit from the online shopping boom. Examples include the likes of SEGRO and Tritax Big Box REIT, which are both warehouse-focused real estate investment trusts. Then there’s logistics specialist Clipper Logistics. Its customers include the likes of ASOS and Joules.

Packaging companies

Packaging companies can also offer exposure to the theme. One good example is DS Smith. It manufactures the types of cardboard boxes that Amazon deliveries come in. Other companies in this sector include Mondi and Smurfit Kappa.

Technology-focused online shopping stocks

Finally, there are plenty of niche technology companies that could help investors capitalise on the growth of online shopping. For example, one stock I like is GB Group, which provides identity management technology. Its customers include ASOS and Nordstrom. DotDigital is another interesting play. It specialises in email marketing software.

Overall, there are many different online shopping stocks listed in the UK. The key, as always, is to diversify your capital across a few holdings in order to give yourself the best chance of profiting from the theme.

The post Want to invest in UK online shopping stocks? Here are some companies I’d look at appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in ASOS, Boohoo, JD Sports Fashion, DotDigital, GB Group, DS Smith, Mondi, Clipper Logistics and Tritax Big Box. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon and ASOS. The Motley Fool UK has recommended boohoo group, Clipper Logistics, dotDigital Group, DS Smith, eBay, Tesco, and Tritax Big Box REIT and recommends the following options: long January 2021 $18 calls on eBay, short January 2021 $37 calls on eBay, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. 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.