2 retail growth stocks that could soar in 2024 and beyond!

This Fool explains why these retail giants could be shrewd growth stocks to buy now to bag juicy returns and growth over the long term.

| More on:
Young black colleagues high-fiving each other at work

Image source: Getty Images

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.

Two growth stocks I’m eyeing up are retail stalwarts Dunelm (LSE: DNLM) and Marks and Spencer Group (LSE: MKS).

Here’s why I’d be willing to buy some shares when I can.


I must confess I own many Dunelm home products. I even manage to drag my husband there a fair bit, which is an achievement in itself!

The shares are up 6% over a 12-month period, from 1,061p at this time last year, to current levels of 1,127p. However, in 2023 alone, they rose by 23% in the calendar year.

The obvious risk that could hurt Dunelm in the short to medium-term is continued volatility. The current cost-of-living crisis means consumers are more concerned with paying higher mortgages, as well as rising food and energy bills. Decorating may not be high on the priority list for many. This could have an impact on the firm’s performance and return levels.

According to analysts at Peel Hunt, the share price could reach 1,375p. This price target is linked to the analysts forecasting excellent performance in the future. Forecasts show 5%-6% annual growth in pre-tax profit for the next three years. However, I’m conscious forecasts don’t always come to fruition.

Finally, the shares look decent value for money on a price-to-earnings ratio of just 14. Plus, a dividend yield of over 6% is enticing. However, it’s worth remembering dividends aren’t guaranteed. Furthermore, the business has a hit-and-miss track record of consistent payouts.

Marks and Spencer

The growth aspect for the retail giant stems from a transformation strategy it has been implementing recently. I reckon it’s already paying off and could continue to do so.

Before we dive into that, the shares have been on a nice upward trajectory over the past 12 months, up 63%. At this time last year, they were trading for 163p, compared to current levels of 267p.

So going back to the transformation strategy, Marks and Spencer has been investing heavily into digital channels, including e-commerce. This could be savvy for long-term growth, due to changing shopping habits. Furthermore, the firm has looked to boost its store presence. Furthermore, it’s refined its ageing infrastructure to boost market presence as well performance.

Recent performance has shown the business is on the up, if you ask me. The firm’s half-year update, released in November, showed profit rose by 84% compared to the same period last year. A Christmas update, released in January, showed that group sales across all its segments rose by an impressive 7.2%.

It’s worth noting the threat of continued economic pressures could hurt performance, especially as Marks and Spencer is seen as a premium brand. Plus, the rise of supermarket disruptors, as well as discount retailers, could chip away at its market share. This could also hurt performance and returns.

Overall, the shares look decent value for money to me, on a price-to-earnings growth ratio of 12 at present.

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.

Sumayya Mansoor 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

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Nvidia stock is becoming more affordable!

Nvidia stock is up 2,500% over five years, but the chip giant’s share split -- announced during its earnings report…

Read more »

Investing Articles

Are Rolls-Royce shares good for passive income?

Our writer is getting mixed messages about the Rolls-Royce dividend. But whatever happens, he thinks passive income hunters will be…

Read more »

Investing Articles

Could the Rolls-Royce share price end 2024 above £5?

As the Rolls-Royce share price continues its remarkable run, our writer considers where it might be at the end of…

Read more »

Investing Articles

UK stocks are hitting all-time highs! Yet these 2 still look cheap to me

The FTSE 100's on a roll. But it's still possible to pick bargain UK stocks, provided we know where to…

Read more »

Satellite on planet background
Investing Articles

At just under £14, can BAE Systems’ share price still be a prime FTSE 100 bargain? 

Despite its bullish price run, BAE Systems’ share price still looks undervalued to me and appears set for strong growth.

Read more »

Photo of a man going through financial problems
Investing Articles

2 dividend shares I’d avoid like the plague in today’s stock market

The UK stock market is full of high-yield dividend shares that could equate to a steady stream of passive income.…

Read more »

Abstract bull climbing indicators on stock chart
Investing Articles

£17,000 in savings? Here’s how I’d aim to turn that into a £29,548 annual second income!

Generating a sizeable second income can be life-enhancing and can be done from relatively small investments in high-dividend-paying stocks.

Read more »

Investing Articles

With as little as £300 a month invested, this stock could net £16,000 a year in passive income

Putting a few hundred pounds each month into the stock market could eventually generate a five-figure annual passive income, this…

Read more »