Does Next’s share price fall present a buying opportunity?

Could Next plc (LON:NXT) (NXT.L) have investment appeal?

NEXT plc
NEXT plc

The Next plc (LON:NXT) (NXT.L) share price fell heavily on Thursday 15 June, being down over 6% on the day at one point.  The shares recovered by 1.41% on Friday 16 June and at the time of writing are trading at 4095p. Does this present a buying opportunity?

Fundamentally the signs are good in my view. Next trades on a PE of 9.15 and has an ordinary dividend yield of 3.86%. However, when special dividends are taken into account it’s yielding around 6%. There has been a lot of news recently about the UK consumer facing pressure, and indeed a lot of shares with UK exposure were hit on Thursday such as Whitbread, who by the way do have a lot of Costa Coffees in Next stores.

So this seems to be a factor in the fall, especially bearing in mind that quite a lot of Next customers buy items on credit.  I still think the shares are pretty good value around these levels however. Looking at a three month chart you can see that the support level seems to be around 4000p and if I could buy at around this price I think Next could prove to be a retail bargain.

The strategy I would adopt could be to buy with the intention of holding for at least a year, or until the share price potentially reached 5000p for example. I remain a holder of Next and believe that over time there could be both capital growth and decent dividends. PLC (LON:BOO) (BOO.L) also suffered on Wednesday and Thursday but sprung up by over 2% on Friday. The PE is still relatively high at 108.45, though. There is no dividend yield at all. Despite its amazing rise over the past year, I would avoid Boohoo shares. Potentially, they could even be a shorting candidate for me.

About Mark Howitt 121 Articles
Mark Howitt is a long-term buy-and-hold investor who has been buying and selling shares for a number of years. He is particularly interested in the banking, energy and telecoms sectors, but also holds stocks in a variety of other industries.