Marks and Spencer shares smash through 400p. Is there more to come?

Marks and Spencer shares leap higher following a very encouraging set of half-year numbers. Our writer looks at whether this brilliant momentum can continue.

| 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.

Image source: M&S Group plc

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 resurgence of Marks and Spencer (LSE: MKS) shares will surely go down as a textbook example of how lucrative it can be to go fishing for value stocks that other investors think are done and dusted.

If I’d had the foresight to back the FTSE 100 member just over two years ago, I’d have multiplied my cash many times over. Even just buying at the beginning 2024 would have given me a gain of almost 50%.

Created with Highcharts 11.4.3Marks And Spencer Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Today’s (6 November) M&S statement, covering the 26 weeks to 28 September, goes some way to justifying this momentum.

Should you invest £1,000 in easyJet right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if easyJet made the list?

See the 6 stocks

Beating expectations

Revenue increased 5.7% to £6.48bn while profit jumped 17.2% to just under £408m. The latter massively surpassed analyst expectations of £361m.

Broken down, food sales rose 8.1%, while higher-margin clothing and homeware sales improved 4.7%. Elsewhere, the firm’s joint venture with Ocado posted an adjusted loss of £16m — lower than the £23.4 loss reported the year earlier.

Taking all this into account, I don’t think today’s incredibly positive reaction — getting on for +8% as I type — is all that surprising.

Will this continue?

The key question is whether the share price can go even higher. I wouldn’t bet against it, especially if the all-important Christmas trading period goes well. With inflation having cooled and interest rates (slowly) coming down, many shoppers could throw caution to the wind and splash the cash for the festive period.

Although investors shouldn’t assume too much, the company did say that trading over the first five weeks of H2 had been “on track” and that it was “confident of making further progress in the remainder of the year“.

An update should arrive on 9 January. So long as investor expectations haven’t got out of hand, they could be toasting a very pleasant start to 2025.

More to do

They are also likely to be lapping up the comments of CEO Stuart Machin with regard to the firm’s long-term strategy.

In the spirit of being positively dissatisfied, we have so much to do over this year and beyond. Despite our strong trading momentum, there is much more opportunity for future growth and that energises us.

He went on to say that Marks now wants to focus on improving its Home and Beauty offer and its digital infrastructure (where progress has been slower than anticipated). Meanwhile, a store rotation plan is gathering pace and an “international reset” is under way. On top of this, it’s confident of achieving £500m in cost savings by FY28.

This all sounds pretty good to me!

No sure thing

That said, it’s worth noting that Marks and Spencer shares already changed hands at a price-to-earnings (P/E) ratio of 15 times forecast earnings before markets opened this morning (6 November).

That valuation might still seem reasonable relative to valuations across UK stocks but it’s rather high for the retail/consumer defensive sector. It’s also worth bearing in mind that the impact of the recent Budget on the company, its suppliers and customers was “for now uncertain“.

So while I suspect the shares could move higher based on current sentiment, I don’t think they necessarily offer the value they once did.

For this reason, I’m going to check for any unmissable bargains in the rest of the market before deciding whether to buy in here.

AI Revolution Awaits: Uncover Top Stock Picks for Massive Potential Gains!

Buckle up because we're about to dive headfirst into the electrifying world of AI.

Imagine this: you make a single savvy investment in some cutting-edge technology, then kick back and watch as it revolutionises entire industries and potentially even lines your pockets.

If the mere thought of riding this AI wave excites you and the prospect of massive potential returns gets your pulse racing, then you’ve got to check out this Motley Fool Share Advisor report – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And here’s the kicker – we’re giving you an exclusive peek at ONE of these top AI stock picks, absolutely free! How’s that for a bit of brilliance?

Get your free AI stock pick

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.

Paul Summers has no position n 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

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »

Investing Articles

2 things to remember when stock markets are turbulent

US trade policy has rattled the stock markets in New York, London and elsewhere. Our writer outlines a couple of…

Read more »