I’m feeling upbeat about the investment potential of shares in Next plc (LON:NXT) (NXT.L), Boohoo.Com PLC (LON:BOO) (BOO.L), BT Group plc (LON:BT.A) (BT.A.L) and Royal Mail PLC (LON:RMG) (RMG.L).
Next may have an uncertain future due to weak consumer confidence, but its strategy could help it to perform relatively well. The company seems to have a high level of customer loyalty. After the financial crisis it delivered year-on-year growth for an extended period, and I feel this shows that it can perform well even if inflation is above wage growth.
With Next’s shares trading on a P/E of 11, I feel they could offer strong upside potential. While potentially volatile, they could outperform a number of retail peers.
Boohoo’s results yesterday showed that the company has a strong business model in my view. Its doubling of sales has put it in a relatively strong position within some of its key markets. There seems to be further growth potential ahead – particularly from PrettyLittleThing, which was the star performer in recent months.
With Boohoo continuing to increase its sales guidance, the company appears to be in a strong position to generate relatively high capital growth.
BT’s turnaround may take some time to become evident. It is seeking to fundamentally restructure its business, with management changes being a part of its plan. It is also investing heavily in pay-tv and sports rights, which has been a drain on its resources.
In the long run, though, there seems to be cross-selling opportunities for the company. Its cost savings could also boost profitability, while BT’s P/E of around 10 suggests to me that it may offer good value for money.
Royal Mail may be seen as a struggling company by many investors. In the UK, its performance has been mixed and it continues to suffer from heightened political risk.
However, Royal Mail’s international division, GLS, is performing well. It is continuing to deliver relatively high growth rates. When coupled with the cost efficiency measures being taken in the UK, this could lead to an improved outlook for the overall business.