Boohoo (LSE: BOO) shares have had a fantastic run in 2019 so far. Beginning the year at around the 160p mark, the share price is now just under 250p, which represents a gain of over 50%. Not bad in just over four months.
However, zoom out on the chart and you’ll see that for the majority of the last two years, Boohoo’s share price hasn’t really gone anywhere, which has been a little frustrating for long-term holders. The stock appears to be consolidating after a really strong run in 2016. So, what’s next for Boohoo shares? Can they keep rising?
Operations wise, Boohoo continues to make strong progress. In late April, the group released full-year results for FY2019 and the numbers were excellent. Group revenue was up 47% in constant currency to £857m, while adjusted diluted earnings per share climbed 29% to 4.15p.
Again, it was PrettyLittleThing (PLT) that stole the show, as revenue here surged 107% and customers increased 70% on the year before. Smaller brand Nasty Gal also registered strong growth. It appears that the group still has plenty of momentum.
That said, one issue here for investors to be aware of is that the group only owns a 66% share of PLT. This means that Boohoo shareholders aren’t getting the full benefit of the brand’s strong growth, which tarnishes the investment case slightly.
Further growth ahead
Looking ahead, Boohoo is expecting group revenue growth of 25-30% this year and, beyond that, it’s targeting sales growth of 25% per year. The company also advised it will continue to make investments in infrastructure and people in an effort to be a leader in the global fashion e-commerce space.
Overall, I continue to like the growth story here. Boohoo seems to be a highly appealing shopping destination for millennials thanks to its low-cost, fashion clothing and user-friendly website. The company also appears to have big ambitions, with new CEO John Lyttle stating recently that the group is “well-positioned to disrupt, gain market share, and capitalise on what is a truly global opportunity.”
Note that Boohoo is not just a UK clothing play – the group now generates over 40% of its revenues internationally. I was actually on a beach in Sydney, Australia, back in February and overheard two millennials raving about PLT swimwear! So, there’s a big market opportunity for the group.
Potential for more gains
Boohoo is not the kind of stock I’d bet my life savings on, as its valuation is quite lofty. Right now, its forward P/E is just under 50, and that’s before you strip out the minority interests. However, as a long-term speculative play, I continue to see appeal in the stock. I think there’s potential for more share price gains as the company continues to grow.
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Edward Sheldon owns shares in boohoo group. The Motley Fool UK has recommended boohoo group. 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.