Today, I'm looking at two investing themes: growth and income. I'll compare ASOS (LSE:ASC) vs Boohoo.com (LSE:BOO) and Next (LSE:NXT) vs Debenhams (LSE:DEB). I show you how I believe a blended approach of growth and income could reward patient investors over the long term.
Today I am running the rule over three of the country's biggest clothing retailers all vying for your custom.
Despite the effect of heavy discounting across the High Street, NEXT (LSE:NXT) continues to defy these pressures and punch excellent sales growth, Indeed, full-price sales advanced 2.9% from late October to Christmas Eve, drawing envious glances from many of its retail peers and driven by its red-hot Next Directory catalogue and online division.
Next (LSE:NXT) this morning said that it has paid a special dividend of 50p per share, as it announced in a trading statement at the end of December. Next says that the payment is in line with its well-established policy of returning surplus cash to shareholders via share buybacks or special dividends. Next's share price is up 0.5% at the time of writing.
Equity research analysts at Jefferies have downgraded their recommendation on Next (LON:NXT) to underperform from hold, stating that they believe the multi-channel retailer's competitive advantage is diminishing.
The broker also highlighted that it lowered its pre-tax profit estimates back in December and downgraded to hold, yet the stock has rallied 10 per cent since then, leaving it trading on c.16x its calendar 2016 EPS estimate.
Price target has been left unchanged at 6,000 pence per share.
At 2:30pm: (LON:NXT) Next PLC share price was -67.5p at 7167.5p
I have been wondering for a month or so whether it would be a good time to sell high-quality names such as Associated British Foods (LSE:ABF)and NEXT (LSE:NXT) to add risk to a diversified portfolio by acquiring Monitise (LSE:MONI) and Tullow Oil (LSE:TLW). If I were invested I wouldn't do the switch right now, but here are a few things you should consider about the valuations of these four companies before making up your mind.
At the height of the tech bull market of the 1990s, there was much talk about technology's role in the future. Many of the predictions from that decade have reached fruition. People said that the Internet would change everything. I guess that it has.
There was also talk of what was called 'disintermediation'. Basically this means that the traditional distribution channels -- such as shops, wholesalers and brokers -- would be replaced by companies dealing direct with customers, via the Internet.
Today's update from Supergroup (LSE:SGP) is highly encouraging and shows that the fashion retailer is making good progress under its new management team. Retail sales for the 11 weeks to 10 January increased by 17.8%, with like-for-like sales growing by 12.4%.
If you invest in the fashion business, you really need to know which companies to for -- it's the ones with good long-term track records that keep bringing in the cash, not the latest fashionable ones.
Look at NEXT (LSE:NXT) versus Marks & Spencer (LSE:MKS) for example; both general fashion retailers and both with their own brands, but having remarkably different degrees of success.