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I think so. next to (LSE: NXT) is one of the UK’s strongest retailers. The business offers clothing, footwear, accessories, beauty and home products. And it’s a hybrid system with revenue generated through online sales and store real estate. Last year, 66 percent of revenue came from online business.
There is a lot of strength in the brand. And the company has an impressive history of growth.
However, investor awareness of a looming cost-of-living crisis has weighed on the stock’s gains. They sit around £58 as I write. This is down from last year’s all-time high of £80. But if the stock stays below £65 it will tempt me.
Potential for upside surprises
My sense is that the cost of living crisis may not be as severe as anticipated. Many commodity prices have been declining along with container shipping costs. This could help put downward pressure on inflation going forward. On top of that, the government’s recent intervention in the energy market will help stretch consumers.
My guess is that there is potential for the market to move higher in the future. In other words, future sales may be stronger than analysts expect. And the company may issue more optimistic outlook statements than expected a few weeks ago.
Of course, I could be wrong in my estimation. And it’s important to keep in mind that all stocks carry risks and upside potential. Businesses can face operational hurdles at any time. However, we will know more about the current progress when it releases its next half-year report on September 29. And I look forward to reading that.
Meanwhile, City analysts expect strong growth in the stock. And future expected yields are running at around 3.4% for the business year to January 2024. I think that would be interesting if earnings growth picks up faster in the coming months and years.
Marketing is stable.
He then released a positive business statement on August 4. And that would be a good foundation to build on. Sales were slightly higher than expected. And the company believes that the reason for this may be partly the unsuccessful competitors. Customers have fewer choices because many other company stores have closed.
However, much of the strength in the business comes from the company’s extensive online presence. And this has helped the business survive the challenges of the pandemic. I suspect the resiliency of the operation will be reflected in the ongoing dividend payouts and the company’s share buyback program.
Therefore, I view the current stock price dip as an opportunity to take a contrarian position in strong stocks. FTSE 100 Strong. However, I could be wrong to be optimistic about continued prospects. However, when I have some spare cash I will add the stock to my diversified portfolio.