Is Boohoo Stock A Good Investment?
To answer whether the Boohoo stock ($BOO) is a good investment or not I’m going to use ASOS as a comparison.
ASOS shares will be upgraded from the Alternative Investment Market (AIM) onto the London Stock Exchange (LSE) on 22 Feb 2022.
$ASOS, the online fashion retailer has to overcome its recent profits warning which saw the departure of its chief executive, Nick Beighton.
Boohoo has suffered similar issues, yet such ups and downs overtime are part of the business model.
Just like seasonable businesses do well at certain times, so too the fashion industry can suffer all kinds of issues and then be fruitful at other times. Even though it’s not a seasonable operation per say.
Can Boohoo catch up to the success ASOS has seen in recent years?
If so, then Boohoo could gain some of that market share.
The covid lockdowns saw higher sales and a lot of success for online businesses including Boohoo’s.
But the Boohoo share price is dropped below two thirds, from well over £3.50 per share over the last 12 months to under 90 pence.
Short-sellers are not helping the situation with Boohoo’s share price, and of course the short-sellers are profiting from the lack of sentiment.
Some people in the know, believe the bottom has been reached (at around 85 pence).
These same insiders connecting to the short-selling activities are now taking long positions.
They are buying up all those cheap looking shares
Given ASOS has faced similar ups and downs and continues to do well, I believe the current difficulties Boohoo face will be short lived.
Therefore I fully expect Boohoo share price to rise when those greedy hedge fund managers slam on the short-selling breaks and step on the long position.
I expect short-sellers of Boohoo will load up, buying as many cheap Boohoo shares as they can get their hands on.
Boohoo is not alone when it comes to the strain on the consumer sector.
most if not all online fashion retailers have faced the pressures of a drop in sales when lockdowns ended, on delays to deliver orders to customers and on supply problems.
There are a myriad of problems, some bigger than others and issues take time to resolve.
Should you buy Boohoo shares now?
Well next month, Boohoo will release its fourth quarter results.
If these results are better than expected, I would expect to see a huge boost to the Boohoo share price.
I would say that by the end of April 2022, the Boohoo share price should – given all what is known, and expected – be 50% higher, if not by more.
If I’m correct,
and I believe I am (but do your own research) those still all short on Boohoo will see their short-selling trades triggering their stop losses as the share price rises.
Only inexperienced short-sellers will stop there and not go long on Boohoo.
With Omicron done and dusted, out of the way, soon to be the distant past, the e-commerce company can concentrate on getting back on track and increase its sales and the way it delivers its business model.
Boohoo may need to establish distribution centres in the U.S. and Canada to keep up with the speed of meeting customers delivery expectations of its products.
ASOS had invested in this warehouse storage area, and Boohoo needs to catch up with ASOS.
Indeed with other online fashion retailers too in order not to succumb to being a victim of its lack of taking positive action, when changes need to be implemented.
Boohoo needs to,
invest in delivery fulfilling centres in the U.S. and Canada and boost sales with increased advertising and offers so it can beat its competition.
Inflation is rising and some investors worry this could have a bearing on Boohoo sales figures in the coming months and years.
However, even during hard times, the young generation – which represent most of Boohoo’s customer base – continue to buy in the same numbers as they have always done so.
And I would expect,
sales to increase given there are more and more younger people with higher spending budgets.
Moreover, in hard times, in times of recession and inflation increases, where prices rise, as the cost of living increases, it is fashion that makes people feel better, thus sales and profits should not be impacted.
At 85p to 90p range, I’m not going to sit there and watch the share price rise without investing.
Is Boohoo Stock A Good Investment?
To me, in my opinion and it’s my opinion only, this is a dream entry and mid to long term hold to gain maximum profits.
I believe the Boohoo share price could reach £7 within three years subject to it making the right moves to keep up with the competition and retain and attract more customers.
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