ASOS plc, Boohoo.Com PLC & Reckitt Benckiser Group Plc: Are 20%+ Returns Achievable?

Will these 3 stocks surge by over 20%? ASOS plc (LON: ASC), Boohoo.Com PLC (LON: BOO) and Reckitt Benckiser Group Plc (LON: RB)

| 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.

Until January of this year, the share price performance of online fashion retailer Boohoo.Com (LSE: BOO) had been extremely disappointing. For example, it listed in March 2014 at 85p and proceeded to post a continued decline in value before it reached a low of just 22p in January of this year. Since then, though, it has soared by 53% and, looking ahead, gains of over 20% are very much on the cards.

That’s at least partly because the UK economy is moving from strength to strength. Wages are rising faster than inflation and consumer spending is on the up, with an accommodative monetary policy likely to stay and push spending levels higher. Certainly, Boohoo.Com operates in other markets, too, but the UK remains a key place for the company, with an aggressive marketing campaign over the last year helping to boost its outlook.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

On this front, the company is expected to increase its bottom line by 43% this year and by a further 27% next year. And, with it trading on a price to earnings growth (PEG) ratio of only 1, it appears to be all set to replicate the performance of 2015, rather than that of 2014, over the medium term.

Rival ASOS (LSE: ASC) has also had a positive 2015, with its shares being up 23% since the turn of the year. And, encouragingly for the company’s investors, it seems to have returned to a clear path to growth, with the company now focusing on its core markets (such as the UK) as opposed to seeking to diversify at a rapid rate, which was seemingly the company’s strategy in recent years.

This refresh in strategy is likely to have a positive impact on margins, since ASOS has previously invested heavily in pricing in new markets. With sales also forecast to show positive momentum, the company’s bottom line is expected to rise by 23% in the current financial year. While impressive, this growth rate is lower than that of Boohoo.Com and, with ASOS having a PEG ratio of 2.6, the former could continue to outperform the latter as it has done over the last six months. Furthermore, should ASOS’s financial performance fail to meet guidance, then its share price could be heavily punished.

Meanwhile, Reckitt Benckiser (LSE: RB) has been a strong performer in 2015. Its shares have risen by 21% since the turn of the year which is a superb performance given that the Chinese economic slowdown has hurt a number of its sector peers. Of course, Reckitt Benckiser is well-diversified, but the Asian economy represents a key part of its future growth strategy.

Clearly, the market is anticipating strong rises in demand for Reckitt Benckiser’s staple items which are due to benefit from the increasing wealth of the rising middle class across the emerging world. However, in the short term the company’s shares may prove to disappoint since Reckitt Benckiser is forecast to post an increase in earnings of just 3% in the current year and 7% next year. With the company’s shares having a price to earnings (P/E) ratio of 26.3, it may be prudent to wait for a keener valuation before buying.

More on Investing Articles

Lady researching stocks
Investing Articles

Here’s why I’m avoiding this dirt-cheap dividend penny stock!

A dirt-cheap, dividend-paying penny stock with a vast presence sounds good on the surface. This Fool isn't convinced, however.

Read more »

Asian Indian male white collar worker on wheelchair having video conference with his business partners
Investing Articles

These top income stocks look dirt cheap to me. I’d buy them now

I'm taking advantage of today's stock market weakness to load up on top value income stocks

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

Excessive stock trading erodes long-term gains!

Are high trading fees eating away at your returns? Research suggests that excessive stock trading could be to blame.

Read more »

Young woman sat at laptop by a window
Investing Articles

Pearson shares are up 25% since the market correction! Should I buy now?

Why have Pearson shares rallied since the market correction? This Fool looks at the educational provider in more detail and…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Recession ready! I’d buy these FTSE 100 stocks for tough times

Jon Smith explains some of his favourite options for defensive FTSE 100 stocks that he's thinking of adding to his…

Read more »

A graph made of neon tubes in a room
Investing Articles

Down 45%, are these UK shares no-brainer bargains right now? 

Several top UK shares are down significantly and two companies on my list look like possible attractive buys right now.…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

I bought these 2 FTSE 100 shares two years ago. Should I now add to them?

Andrew Woods asks if he should add to his current holding in these two FTSE 100 shares ahead of a…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Has the Deliveroo share price bottomed?

The Deliveroo share price (LON:ROO) is down nearly 60% in 2022. Paul Summers asks whether it's now hit bargain territory.

Read more »