This Data Makes Me Want To Buy Marks And Spencer Group Plc

A recent piece of data has made me bullish on Marks and Spencer Group plc (LON: MKS).

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Do you shop online? The answer’s probably ‘yes’. But do you shop online for clothes? The answer still may be ‘yes’ but it is less likely and, according to July’s retail sales figures, it is now less likely than it was in June.

Indeed, online retail sales fell for the first month in 13 years in July, apparently as a result of hot weather luring shoppers away from the high street. Internet sales fell by 2% between June and July, while at the same time physical stores showed strong performance.

However, to me that doesn’t make sense at all: surely the hot weather should have made more people shop online and avoid the heat rather than the other way around?

Certainly, I can understand that people may wish to buy ‘summery things’ such as T-shirts, shorts, barbecues, etc. However, I would have thought that buying online would be more preferable in the heat than heading down to the high street.

This got me thinking and I came across a piece of research from Springboard. It said that a longer-term improvement in footfall may be emerging, with there being signs that covered shopping centres (in other words out-of-town retail parks) are becoming less attractive destinations for shoppers.

So, a fall in online sales could be due to a reduction in click-and-collect orders, whereby people order online and collect at a retail park. It is less likely for people to collect on the high street as they are generally unable to park outside for free as they are at a retail park.

Therefore, the high street may actually be making a comeback and, in my opinion, an obvious way of taking advantage of this is through Marks & Spencer (LSE: MKS) (NASDAQOTH: MAKSY.US).

The main reasons for this are that it is very much focused on the high street, with the vast majority of its stores being located in town and city centres. Furthermore, it has not embraced the online revolution to quite the extent that you would imagine, with a new, slick website still a year or two away.

Then there is the fact that its shares trade on a price-to-earnings (P/E) ratio of 14.5, which compares well to the FTSE 100 whose P/E is 15 and to the consumer services industry group, whose P/E is 16.9. Meanwhile, a yield of 3.6% beats inflation, while earnings per share are forecast to grow by around 7% per annum over the next two years.

Of course, you may be looking outside of the retail sector for an addition to your portfolio. If you are, The Motley Fool has come up with a shortlist of its best ideas called 5 Shares You Can Retire On.

It’s completely free and without obligation to take a look at the shortlist and I’d recommend you do so. Click here to view those 5 shares.

> Peter owns shares in Marks & Spencer.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Midnight is celebrated along the River Thames in London with a spectacular and colourful firework display.
Investing Articles

Nvidia shares hit a new high after record earnings. Is there a lot more to come?

Nvidia stock smashes expectations, as quarterly profit soars 600%. It's time for a 10-for-one stock split too, as it reaches…

Read more »

Abstract 3d arrows with rocket
Investing Articles

Scottish Mortgage shares rise following FY update! Time to buy?

Scottish Mortgage (LON:SMT) shares were closing in on 900p today after a positive full-year report from the giant FTSE 100…

Read more »

British Isles on nautical map
Investing For Beginners

It’s time! Here’s my FTSE 100 hit list for the general election

Jon Smith outlines the potential reaction for the FTSE 100 from the upcoming general election and the main stocks he's…

Read more »

Investing Articles

National Grid reveals £7bn rights issue and the share price plunges – should I invest now?

The National Grid share price has dropped almost 10% and a dividend cut is looming, but it may be a…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Nvidia stock is becoming more affordable!

Nvidia stock is up 2,500% over five years, but the chip giant’s share split -- announced during its earnings report…

Read more »

Investing Articles

Are Rolls-Royce shares good for passive income?

Our writer is getting mixed messages about the Rolls-Royce dividend. But whatever happens, he thinks passive income hunters will be…

Read more »

Investing Articles

Could the Rolls-Royce share price end 2024 above £5?

As the Rolls-Royce share price continues its remarkable run, our writer considers where it might be at the end of…

Read more »

Investing Articles

UK stocks are hitting all-time highs! Yet these 2 still look cheap to me

The FTSE 100's on a roll. But it's still possible to pick bargain UK stocks, provided we know where to…

Read more »