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Have I missed the boat with Halfords shares?

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Halfords (LSE: HFD) shares have soared of late. Since the beginning of 2021, the stock is up approximately 50% and it’s 300% higher over the last 12 months.

That’s impressive. But have I missed the boat with Halfords shares? I don’t think so. As a long-term investor, I reckon the stock could rise further even from its current price. Here’s why I’d buy.

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Tailwinds

Let me start off by saying that it has helped in the past year when a business has been deemed an essential retailer and services provider. This was the case with Halfords, which meant that the stores stayed open during the pandemic.

As a result, the retailer has performed exceptionally well. In fact, I’d say it has emerged as a winner from the crisis. Halfords also capitalised on the staycation boom last year. I think this could continue this year as well if holidays abroad are either not allowed or are seen as too complex/expensive to opt for.

Can the rise continue?

These tailwinds have been driving Halfords shares higher. But as lockdown restrictions start to ease in the UK, can the stellar performance continue?

People are starting to head back to work and gyms are opening up again. This may mean that the sale of its cycling products may slow down, although that’s not a certainty.

The share price has increased by a substantial amount during the pandemic, which indicates that it’s likely to be sensitive to any negative news. Any fall in revenue or profits could result in the share price taking a hit.

The store estate

But despite these concerns, I’m confident that Halfords shares can rise further.

Online sales have helped the retailer. So I’m not surprised that the physical stores are being streamlined. In its January trading update, it was announced that 33 stores have already closed with another 47 low-returning shops and garages due to shut down.

This means that Halfords store cost base should reduce, which is likely to improve profitability. Of the remaining sites, the focus will be on services that online rivals can’t deliver. These include click-&-collect as well as face-to-face customer service from a product specialist.

Mobile Expert

What’s also helped the business is Halfords Mobile Expert service. This is where the retailer’s technicians come straight to your door to fix your vehicle. This is still relatively new, but I think there is huge growth potential after Covid-19.

Consumers can easily book a Mobile Expert online and get a door-to-door service at a specific time slot. I reckon this should appeal to many seeking ultra-convenience. What I also like is that this service should encourage cross-selling opportunities at Halfords Autocentres, thereby boosting revenue.

Outlook

The retailer is due to report its full-year results on 17 June. And it expects total profit before tax in a range of £90m to £100m. It’s worth noting that this is after the £10.7m repayment of furlough income received from the UK government.

I think it’s encouraging that company is in a position to return this money. And I’m also confident about the prospects for Halfords shares as a long-term investor.

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Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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