3 Elements Set To Drive NEXT plc To The Stars

Royston Wild looks at the critical factors which make NEXT plc (LON: NXT) a stunning stock pick.

| More on:

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.

next

Today I am looking at why I believe NEXT (LSE: NXT) is ready to charge higher.

A market leader in online shopping

Make no mistake: NEXT is one of the best-placed UK retailers to benefit from the boom in online shopping. Strong investment in the firm’s NEXT Directory internet and catalogue division helped to drive sales here 12% higher from January last year to Christmas Eve, comfortably outstripping growth of 1.2% in its stores and helping to push group turnover 5% higher during the period.

And recent sales data underlined the massive earnings potential of these lucrative online channels, particularly as shopping by mobile phone and tablet PC continues to accelerate. The IMRG Capgemini e-Retail Sales Index showed sales across all retail sectors surge 18% year-on-year in January, with revenues from clothing advancing by a chunky 9% over the period.

Consumer confidence on the uptick

Promisingly for NEXT and its rivals, signs of an upturn in consumer confidence bodes extremely well for spending levels looking ahead. The GfK UK Consumer Confidence Index released last month showed levels reach -7 in January, the highest level for six years.

A strong recovery in the domestic economy has helped to turbocharge this improvement in customer sentiment, with GDP growth of 1.9% in 2013 the strongest performance since early 2008. Indeed, GfK noted that its confidence gauge had swung a gargantuan 20 points since April, representing “only the third time in the 40 years of the Index that there has been such a nine-month shift.” I believe that activity at Britain’s tills should ramp up further in line with further economic expansion.

A reliable growth selection

NEXT has proven itself hugely adept at keeping sales moving higher even as wider macroeconomic issues over the past five years have crimped consumer spending power. Indeed, a confluence of extensive brand development and promotion; the popularity of its fashion and homeware lines; and

the aforementioned success of its online offering have helped earnings punch double-digit annual increases during each of the past four years.

And City analysts expect the firm to follow up expected growth of 17% for the year closing January 2014 with rises of 8% in both 2014 and 2015. I believe that NEXT’s proven record in keeping earnings expanding, even in times of severe economic pressure, and strong investment online and in overseas markets makes it a great pick for investors seeking solid growth prospects.

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.

> Royston does not own shares in NEXT.

More on Investing Articles

Happy young female stock-picker in a cafe
Investing Articles

No savings at 25? I’d start by investing £3k in these 3 red-hot FTSE 100 shares

Harvey Jones thinks these three FTSE 100 stocks would be a great way to kickstart a portfolio of UK shares.…

Read more »

Young Black woman using a debit card at an ATM to withdraw money
Investing Articles

Up 35% from this year’s low! Here’s where I think Lloyds shares are headed in H2 of 2024

My Lloyds shares are already doing well this year but that’s not guaranteed to continue. What factors could turn the…

Read more »

Investing Articles

Approaching £5, is there still growth ahead for the Rolls-Royce share price?

The Rolls-Royce share price has been flying in the last year. But is there more growth ahead or should investors…

Read more »

Happy young plus size woman sitting at kitchen table and watching tv series on tablet computer
Investing Articles

Could Raspberry Pi be a growth share to buy and hold?

Our writer explains why he thinks a newly-listed UK growth share could have a bright future -- and considers whether…

Read more »

A pastel colored growing graph with rising rocket.
Market Movers

The FTSE 100 jumps after the Bank of England meeting. Here’s what’s next

Jon Smith runs over the takeaways from the Bank of England meeting today and flags up which FTSE 100 stocks…

Read more »

Middle-aged white male courier delivering boxes to young black lady
Investing Articles

How I’d start investing in great value UK shares with £10,000 today

Harvey Jones can see a heap of UK shares he'd like to add to an ISA today. Many combine low…

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

Why did the YouGov share price just crash 37%?

The YouGov share price has been weak for a while. But that's nothing compared to what happened after this profit…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

YouGov shares collapse 37%! What’s going on with this AIM stock?

Our writer takes a look at why YouGov shares fell dramatically today and assesses whether this might be a chance…

Read more »