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Buying Boohoo BOO


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Sold some of my WMH position today and started to buy some Boohoo. My WMH position is still intact and running, but used some of the funds and gain to initiate a position here.


It was actually very difficult to buy the shares in any great volume so I had to put through three separate orders.  The inability to buy shares despite the fall in price suggests to me there is a lot of pent-up demand for this stock. The price has actually come down since the Christmas period trading update. More of which I will add later. I expect this to be a brief article due to time constraints, that and because another share just triggered an alert which I will maybe cover tomorrow also.

 

Does anyone have a position or any thoughts on Boohoo?

 

News articles and RNS can be retrieved for particular shares via IG, and the content of these will be exactly as those submitted to the London Stock Exchange (LSE)

Image below shows how to bring up the relevant news for a share- in this case Boohoo-  and I have circled the icon in red to denote the indicator that new news has emerged for another stock line.

 

boo6.JPG

 

Clicking 'News' gives us the relevant Boohoo news. Below I have highlighted the story that in particular drew my interest. The Trading update over the Christmas 2017 period.

boo4.JPG

 

I have highlighted some of the items that are of particluar interest below, and we can discuss these.

boo5.JPG

 

Christmas is always a critical time for retailers due to the consumer splurge over the holidays, in the new year and also in the form of gift giving. Therefore the main news outlets make a big some-and-dance about Christmas retail trade, in fact this BBC article splits the main retailers into Winners and Losers. You'll note BOO is widely regarded to have triumphed this year. Taken from this BBC summary:

Next managed 1.5% sales increase

Marks & Spence -1.4% sales decline in period

House of Fraser -2.9%

Debenhams -2.6%

Mothercare -7.2%

 

Looking at those numbers I have highlighted then, which focus on a four month period to 31 December.

BOO increased revenue by 103%

USA division up 129%

Cash position now £127m

Not only that, retail margins come in at 54% !

 

Below is the narrative provided in the statement, the highlights are the items I want to bring to the readers' attention.

Guidance

 

Group revenue growth for this financial year is now expected to be around 90%,

ahead of our previous guidance of around 80%, which was raised from 60% at our

interim results in late September. We now expect group adjusted EBITDA margins

to be between 9.25% and 9.75%, narrowing the range from the 9% to 10% as

guided at our interim results.

 

Mahmud Kamani and Carol Kane, joint CEOs, commented:

 

"We are delighted to report another set of strong financial and operational

results, with record sales in the four months to December across all our

brands. The Black Friday period was our most successful ever and we traded

well throughout the period under review. boohoo has continued to perform well,

delivering strong revenue growth on increasingly challenging comparatives last

year. PrettyLittleThing has continued to deliver exceptional results and Nasty

Gal is making excellent progress in its first year. Our focus remains on the

customer proposition: offering the best range of the latest fashion at

affordable prices, coupled with great customer service."

 

I have used IGs own stock analysis tools to gain more understanding of the share, as per image 1 above, then select > 'Market Data'

One useful feature is the Broker Ratings. This tells us how the share is viewed by analysts in the City. 13 brokers currently cover BOO, and of those only 1 have declared a 'sell' rating, and the other 12 are Hold or above, with 10 coveting the share as a Buy.

 boo3.JPG

This is information is good to reinforce my decision. Not to sway it, but broker ratings can help to guide in the right direction, I find.

 

Lastly, we want to look at price. BOO is a highly rated stock and I still kick myself for not getting in when the IP collapsed to about 20p in 2015. I use a log scale for full history as these are  highly useful if the price of the stock being viewed has moved by a large percentage over the period. And BOO certainly has, it has increased 10 fold and more since 2015.

boo1.JPG

 

Looking more closely to the previous 12 months, we can see the price has come off from a high of 270p to the current price around 180p

Especially so after the trading update assessed above, I think this is a good entry point. (this is not advice or recommendation)

boo2.JPG

 

Anyone else interested in BOO or perhaps take the other view and see it as over bought?

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