If you like bargain shares then here is one to put on your watch-list.
Investors love bargains. I suppose it is the prospect of buying something on the cheap that frequently gets investing juices flowing.
One share that has come to the fore recently is Alexon
(LSE: AXN)
. The high street retailer regularly crops up on radar screens and share filters because it is ostensibly cheap. Here's a quick summary of some its key ratios.
It sports a P/E of 9, which values it at a significant discount to the retail sector, which is valued at over 20 times earnings. It has net cash and boasts an above market yield of 6.6%. Alexon is also valued on a price-to-sales ratio of 0.2, which means that investors are paying 20p for every pound of sales rung up on its tills.
For the purposes of comparison, here are some ratios for Alexon's competitors.
Alexon is probably best known for its Dolcis shoe chain, which operates 67 shops and 147 UK concessions. The shoe retailer was part of Sears for many years, but was sold in 1998 and then subsequently bought by Alexon in 1999, which had been running Dolcis under a management contract.
But the core of Alexon's business is women's clothing, which accounts for almost 70% of sales. These are sold through a raft of brands that include Minuet, which caters for smaller women, and Ann Harvey, which sells clothes to ladies who aren't so small. Other women's brands include Eastex, Bay Trading, Dash, Kaliko and Alex & Co. Phew!
Alexon also owns Mandolin, which has been plucked out for culling following a strategic brand review. Seventeen shops will either transfer to other group formats or be disposed. Alexon is also involved in menswear through its Style menswear fascia, which operates 60 shops and 65 concessions.
Alexon, without question, appears cheap at first glance. But truth is, it has been cheap for quite some time because its brands have come under intense pressure on the high street. Recent trading figures bear this out as like-for-like sales fell 8% in the first eleven weeks of the second half. However, Alexon is not alone -- last month Next
(LSE: NXT)
said its first-half sales fell 7.5%.
In my view, what's interesting with Alexon is that things could be a lot worse. It is still profitable, and estimated profits of around £10m this year suggest that the prospective dividend of 9p this year is not in peril. Additionally, let's not forget that venture capitalists are still awash with cash, and debt-free Alexon is the type of business that may just appeal to them.
> Retail - A Game of Two Halves | Retailers Past Their Sell-By Date
