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a lot of FTSE 100 Stocks continue to fall or struggle to bounce back due to current headwinds and geopolitical issues. This gave me some potential bargains to consider for my holdings. What I am thinking about right now is a stock. next to (LSE:NXT) is a buy title.
Retail business
For a quick reminder, Next is a popular fashion retailer that sells all things clothing and accessories, as well as homeware and beauty. It is a high street staple with over 500 stores here in the UK and 200 overseas. It also has a successful online store that accounts for more than half of its sales.
So what’s going on with Next Shares right now? Well, as I write, they are trading at 5,838p. This time last year, the stock was 7,670p, so that’s a 23% drop over the 12-month period.
Investment case
Let’s start by looking at the bearish aspects of future stocks. First, current macroeconomic headwinds may play a significant role in performance and return levels. Rising inflation, inflation, as well as supply chain issues will be affected. Cost increases put pressure on profit margins. Supply chain issues can negatively impact operations and product availability.
Finally, there is a cost of living crisis in the UK. The crisis could cause demand for fashion and home products to fall as consumers consider cheaper goods or decide not to buy new fashions and interiors.
So to the bull case. I think Next shares are good value for money at a price-to-earnings ratio of just 10. The current dividend yield is 6.9%. This is high FTSE 100 Average 3% – 4%. However, I know that the partition can be cancelled.
I like its subsequent development history and position in the market to date. It moved strategically, such as scrapping the catalog model and moving online very early, selling third-party brands later and offering full e-commerce services to other labels. I like this because it not only tells me how to grow, but also how it has the experience of turning and changing storms.
I want to buy a FTSE 100 share
A final point worth noting is that Simon Wolfson, the next chief executive, is linked to the charity, which bought £10m of shares in July. I like it when insiders buy stocks. This is because they need to know very well that it is going in the right direction. If insiders are willing to buy shares, maybe I can too?
In conclusion, I believe it is a well-run business with continued good growth prospects. It has a powerful profile and presence, as well as a strong historical track record and currently an attractive passive income opportunity. I plan to buy stocks for my portfolio. However, I expect some additional headwinds in the short to medium term.