Should I buy Card Factory in a Stocks and Shares ISA?

The Card Factory share price is falling sharply in start-of-week business. Does this make it too cheap to miss for ISA investors like me?

| 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.

The past few days have been tough for the Card Factory (LSE: CARD) share price. The UK retail share has been plummeting since it released fresh financials late last week. Further drops in Monday business mean that the greetings card specialist is now trading at three-month lows.

Card Factory’s dropped primarily on news of a fresh share placing. Is now the time to buy this UK share in something like a Stocks and Shares ISA?

Sales impress again

The Card Factory share price has enjoyed a strong run in recent times thanks to better-than-expected trading. Indeed, even accounting for those falls of recent days, the retailer’s more than doubled in value over the past 12 months.

And Card Factory confirmed that business has remained bubbly in last Friday’s trading statement. It said that the sales performance exceeded expectations following the easing of Covid-19 lockdown restrictions in April and May.

Card Factory also said that trading in recent weeks has been better than levels following the first and second coronavirus lockdowns. But like-for-like sales were down “marginally” in the last five weeks versus the same period in 2019.

Financial restructuring

In other news, Card Factory said that footfall has dropped in its stores. But it added that “customers are shopping less frequently but buying more,” helping it to overcome this problem.

Furthermore, its online sales have dipped as shoppers have been able to return to its stores, but “online sales are still exceeding pre-pandemic levels”.

As I said earlier, news surrounding an equity raise has prompted investors to head to the exits, despite the recent robust trading. Card Factory announced that it had increased its bank facilities by £25m to £225m. This comprises a £100m revolving credit facility, a £75m term loan, and facilities totalling £50m under the Coronavirus Large Business Interruption Loan Scheme.

it clocked in with net debt of £110m as of 16 May, a level the business aims to gradually reduce via that financial restructuring. It would be obliged to pay £5m in fees if pre-payments on this debt were not paid on time, it added. So it’s planning to generate £70m via a share placing to facilitate these repayments.

Why I’d buy Card Factory shares

Commenting on the news, chief executive Darcy Willson-Rymer said: “I am pleased we have secured increased banking facilities, which afford the group the headroom required to focus on realising the growth strategy.” In particular he said that that the restructuring would allow the firm to invest in its online capabilities. 

I’m thinking of adding Card Factory shares to my ISA following that recent share price weakness. Sure, the company operates in a competitive landscape that could damage revenues growth. However, I think its low-price business model will attract people to its stores again now that Covid-19 restrictions are easing. And its improving e-retail operations should see it grab custom from the likes of Moonpig too.

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 Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Card Factory. 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.

More on Investing Articles

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

5 steps to start buying shares with £5 a day

In a handful of steps, our writer explains how someone new to the stock market could start buying shares for…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

3 essential factors for investors to consider when aiming for passive income success

Mark Hartley outlines three of the most important considerations investors are faced with when attempting to secure a lucrative passive…

Read more »

Investing Articles

£10,000 invested in Barclays shares 1 month ago is now worth…

Barclays shares have carried on where they left off in 2024, by climbing far faster than the FTSE 100. Harvey…

Read more »

Investing Articles

I’ve been watching the easyJet share price like a hawk. Here’s what it did last week

Harvey Jones can't take his eyes off the easyJet share price. He thinks it looks good value and ready to…

Read more »

Investing Articles

A £10,000 investment in Nvidia stock 6 months ago is now worth…

Nvidia stock's shown a lot of volatility for a mega-cap company in recent weeks. Dr James Fox explores how an…

Read more »

Investing Articles

4 reasons Ferrari could continue to be a stock market winner

The global luxury goods market may have struggled in recent years, but you wouldn’t guess that from Ferrari’s soaring stock.

Read more »

Investing Articles

5 perfect starter stocks to consider for a Stocks and Shares ISA in 2025

Wondering which shares to buy for a newly opened Stocks and Shares ISA? Our writer thinks these five investments are…

Read more »

Row of terrace houses.
Investing Articles

Thinking about buy-to-let? Consider these UK stocks instead

Owning UK property stocks could be a better way to invest in buy-to-let, though there are drawbacks. Royston Wild explains.

Read more »