Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Good set of results from Boohoo, but is the upside now priced in?

By Gary Newman

26 April 2016 07:27

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Online fashion retailer Boohoo (BOO) has undergone a steady recovery over the past 15 months or so, but I would question how much further this run of upwards momentum can extend.

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Comments

wildrides

27 April 2016, 03:53

Scotty’s coming for you (Jaws music in background )
Gary Newman

27 April 2016, 05:49

Yeah know he is a fan – although to be fair he was from much lower prices when there was a lot more upside potential. The fairly high PE ratio isn’t such a concern as long as PEG is also strong, but not convinced that we’re going to see that level of earnings growth again for the coming year. Nothing wrong with the company that i can see, I just don’t see an awful lot of upside from here, maybe 55p tops if it even gets that high, and at that price i feel everything would be fully priced in (PEG would probably be around 1 at that price level).
Paul Scott

27 April 2016, 18:08

I agree to a certain extent – BOO is expensive now. But it’s expensive for a reason – because it’s one of very few strong organic growth companies on the UK market.

The growth is international too, so the rating is likely to reflect that – it will look very expensive on a PER basis for several years now, I expect. Just like ASOS did, all the way from 9p to 7000p – it was never cheap on a PER basis.

So I agree. BOO is not a bargain any more, in fact it’s pricey. But pricey for a good reason, in my opinion.
Gary Newman

28 April 2016, 01:49

Paul,
I can definitely see your point with this one and it definitely isn’t one I’d consider shorting – there’s no fundamental reason to that i can see. All comes down to the level of growth it can maintain i think.