The Halfords share price is down 10% in 1 month. Should I buy?

The Halfords share price has taken a tumble in the last month. But is this blip a buying opportunity? Here’s my take on the company.

| 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.

Man changing battery on electric bicycle

Image source: Getty Images

The Halfords (LSE: HFD) share price is down by 10% over the past month. But the stock is still up over 35% in 2021 so far and has increased by more than 145% during the last 12 months.

Clearly there has been some profit taking recently after it reported its full-year results in June. I first covered the stock in April and was bullish then. I still am. I’d buy the stock today, especially as it’s trading with a price-to-earnings (P/E) ratio of 9x. This cheap valuation is too low for me to ignore.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

The results

In a nutshell, the results last month were strong. Halfords posted a rise in full-year revenue and profits as it benefited from the boom in cycling products and motor service sales. Underlying profit before tax soared (post-IFRS 16) by 184.1% to £64.5m and total revenue jumped 13% to £1.3bn. These numbers are very impressive.

What I also like about the firm is that it’s in a strong financial position. The balance sheet is in a good state and it finished the financial year with net cash of £58.1m. What this means is that it has the flexibility to invest and grow for the future. This should boost the Halfords share price going forward.


What caught my eye was how it reinstated the dividend. It’s worth noting here that many companies either cut or suspended their income payments in order to preserve cash during the pandemic. So the fact that the company is doing this is certainty a good sign and means that it can afford it.

Halfords proposed a final 5p income payment for its 2021 financial year. It also expects to deliver a full-year dividend of 9p in 2022 and profit before tax (post-IFRS 16) of above £75m. This upgrade in profitability forecasts is encouraging and is an indication that Halfords expects the good times to roll on into its next financial year.

Momentum has so far continued. The firm has seem a strong demand  for motoring services, and cycling products. Its touring categories are performing well given the trends towards staycations this holiday season.

Electric boom

I reckon investment in the transition to electric vehicles should boost the Halfords share price too. Most investors know that economies are focusing on a green and sustainable future. So Halfords is investing in the electric boom.

Its aim is to become the leader in electric mobility services and I think it can get there. It’s training its store and garage staff on how to service the next generation of cars, bikes and scooters. And by the end of 2022, more than 2,000 of its employees will be trained in this field.


Of course there are risks. There’s no guarantee that the 9p dividend will be paid or it will meet its profit target in 2022. And if the demand for staycations and cycling products tapers off after Covid-19 restrictions are lifted. This could have a negative impact on the Halfords share price.

But I’m confident that the company is taking the right steps. Hence I’d buy the stock.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

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.

More on Investing Articles

Futuristic front of NIO car in Norwegian showroom
Investing Articles

Down over 50%, is NIO stock the best EV pick right now?

NIO stock has dipped over 50% in the past year. Does this create the perfect opportunity to buy or are…

Read more »

Buffett at the BRK AGM
Investing Articles

3 Warren Buffett techniques to build my wealth

Our writer shares a trio of Warren Buffett investing habits he hopes can help him build his own wealth.

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Aviva shares are in demand. Should I buy too?

Hargreaves Lansdown investors were piling into Aviva shares last week. This Fool is asking whether he should join the queue.

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

3 reasons why I think the IAG share price could rally this year

Jon Smith writes about how improving risk sentiment could help the IAG share price this year, but not without risks…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

A passive income stock I’ve bought to supercharge my wealth!

I think this UK dividend stock is one of the best to buy for healthy long-term passive income. Here's why…

Read more »

British Pennies on a Pound Note
Investing Articles

3 hot penny stocks I’m buying in June!

With their exciting growth potential, penny stocks can be great investments. I've found three to buy next month based on…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

2 green dividend shares I’d buy with £500

Jon Smith explains two dividend shares with a focus on renewable energy that have caught his eye at the moment.

Read more »

Young black woman walking in Central London for shopping
Investing Articles

Should I buy these cheap FTSE 100 shares before June?

Paul Summers considers whether he should add these cheap FTSE 100 stocks to his portfolio before their next updates.

Read more »