Are Next plc, Burberry plc and Dixons Carphone plc 3 consumer kings?

If you want to buy into the global consumer boom, then you should consider Next plc (LON: NXT), Burberry plc (LON: BRBY) and Dixons Carphone plc (LON: DC).

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Shopping is a great British pastime. And as the ranks of the world’s middle classes grow, there will be more and more shoppers globally who want to spend their hard-earned cash on consumer brands too. That’s why I think we’re just seeing the beginning of a consumer boom that investors have to be part of.

So in this article I list three of my top consumer picks: one is a mainstream retailer, one is a premium fashion brand, and one is an electrical retailer. All three are my consumer kings.


Next (LSE: NXT) is perhaps Britain’s greatest retail success story. Over the past decade the share has been on an incredible bull run, but the last year Next has seen its share price tumble.

Yet, as far as I can see this is still one of the world’s most impressive retailers, and as well as its very strong position in the UK, it’s expanding rapidly overseas, and particularly into emerging markets.

That’s why this is the ideal time to buy into this firm. What’s more, renowned fund manager Neil Woodford agrees, and has recently invested in the business.

Earnings are consistent and are still trending upwards, albeit more gradually. Yet Next is good value, at a current P/E ratio of 12.04, and pays out a 2.85% dividend yield.


That characteristic Burberry check, in shades of beige, is what many people still think of when you mention Burberry (LSE: BRBY). But check out the website and you’ll find a broad range of high-end clothes and accessories that are a fresh take on British fashion and show how Burberry has transformed itself.

Like Next, Burberry has trended higher and higher, but has fallen back recently. Yet this is a company that’s still a very consistent cash generator. And the share price falls mean this is the perfect time for canny contrarians to invest.

At the height of the bull run, I would have said that Burberry was too expensive to buy into, but now the P/E ratio is 14.18, with a dividend yield of 3.34%. The income is well covered by profits and I expect it to gradually be increased over time.

Dixons Carphone

The shake-out of retail companies has left Dixons Carphone (LSE: DC.) as one of the big winners. Since the dark days of the Great Recession, this company has been turned around. For me personally, it’s now the go-to retailer if you want to buy a smartphone, computer, laptop, fridge or dishwasher.

It basically covers the whole of the electronic retail space in the UK. And what’s more, all the naysayers who thought that bricks-and-mortar retail was going to be beaten all ends up by the internet have been proved wrong. I think Dixons Carphone very often thumps Amazon on price, as well as quality.

The company has moved upmarket and its products are basically the best that you can find in the market today. I tipped the firm three years ago, and since then the share price has doubled. But I think there’s more to come from this business.

Earnings continue to trend upwards, and the 2016 P/E ratio is a reasonable 14.36, with a dividend yield of 2.37%.

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.

Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has recommended Burberry. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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