P. 28

Debenhams typifies the problems faced by the sec-
tor, but it is something of an extreme. The chart below shows average broker and tipster sentiment towards 54 retailers, and shows that 38 of these firms had a positive average rating.
Some of these only marginally squeezed into the ‘Buy’ category; Pets at Home Group (PETS) for example has received 33 tips so far this year, with an average score of 3.1 (where ‘Buy’ = a score of 5 and ‘Sell’ = a score of 1), while Next marginally achieves ‘Buy’ status (56 tips, average score = 3.2). Other retailers have unanimously strong positive sentiment.
Of these, Shoe Zone (SHOE) received the most tips (14 tips, average score = 5.0). The firm recently announced an update announcing that full-year profit would beat market expectations, and tipsters such as Tom Winnifrith
There is no doubt that retailer woes are far from over, but tough conditions have enforced much-needed change and transformation, such as tilting towards providing more of an ‘experience’ to consumers than a simple shopping trip.
The number of buy ratings awarded by tipsters and brokers in the sector is testament to this.
(ShareProphets), Roland Head (The Motley Fool) and Rupert Hargreaves (The Motley Fool) have been keen on the shares for some time. B&M European (BME) (39 tips, average score = 4.95) remains something of a dar- ling amongst brokers and tipsters alike. Tipster Royston Wild notes that ‘in times of constrained consumer spending like these, this strive to deliver exceptional value \[will\] keep driving profits at B&M higher’.
On the other side of the spectrum, online shopping site Koovs (KOOV) has been recipient of a stream of nega- tive ratings (6 tips, average score = 1.00). Shares have slumped over 35% since the beginning of the year, and tipsters Gary Newman and Steve Moore of ShareProph- ets have been particularly scathing in recent months, with the former ‘struggling to see how the business model works’. Other big names such as Mothercare
(9 tips, average score = 2.33) and Marks & Spencer Group (41 tips, average score = 2.76) reside firmly in ‘Sell’ territory.
Furthermore, Deloitte suggest that the picture is not quite as gloomy as the media often depicts; stores are not closing simply due to trading conditions, but due to a ‘tipping point’ in changing consumer behaviour.
Therefore, keeping an eye on the sector, and being able to pick out those retailers that are ahead of the curve can yield strong results for investors. Keeping an eye on what financial commentators are saying can prove to be a useful tool in a rapidly changing industry, and that’s what we try to offer out users at Stockomendation.
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Disclaimer: The contents of this article should not be considered financial advice. Returns used in this analysis are expressed as price returns. All information displayed as at 26th October 2018.
 DIY Investor Magazine | Dec 2018 28

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