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There are many ups and downs to retail stocks, the tough bit is getting to know how to get to know them!
What makes a good retail stock?
A number of factors. A few are here.
Other notes
The ease of entry to market means how easily a competitor can start up and directly compete with you. In retail, this is relatively easy, lets say compared with the Oil and Mining stocks.
Managememt too, plays an important part as fads, fashions and brands are judged harshly by the general public.
Lastly, the economic cycle also plays a part in the price of stocks. Buy good companies cheaply. Timing can be important, especially when the hot shots of retail have a high profile. Sometimes the stocks that keep under the radar, but keep growing, are great stocks. There are more of these kinds of Keep the winners, sell the losers. Try not to sell companies before holding them while the, once you have done a good analysis of them. If they were good a few years ago you need to ask yourself what has changed? If nothing has changed and there is still good long term potential selling when the stock goes down is not a good reason to sell. Nor is selling when the stock goes up.
If you do pick a winner, you can do very,very well from retail stocks.
What makes a good retail stock?
A number of factors. A few are here.
- Good balance sheet
- Modest expansion plan- not too fast, but steady
- Potential for international or wider growth- internet/ national etc
- Excellent systems in place and/or good management
- Bullet proof products/services
- Good track record of growing profits
- Low Debt-to Equity ratio
- Good Return on Investment/ Return on Capital Employed (more than 15-20% is good, above is excellent) Many years of good ROCE signifies could be a very good company
Other notes
The ease of entry to market means how easily a competitor can start up and directly compete with you. In retail, this is relatively easy, lets say compared with the Oil and Mining stocks.
Managememt too, plays an important part as fads, fashions and brands are judged harshly by the general public.
Lastly, the economic cycle also plays a part in the price of stocks. Buy good companies cheaply. Timing can be important, especially when the hot shots of retail have a high profile. Sometimes the stocks that keep under the radar, but keep growing, are great stocks. There are more of these kinds of Keep the winners, sell the losers. Try not to sell companies before holding them while the, once you have done a good analysis of them. If they were good a few years ago you need to ask yourself what has changed? If nothing has changed and there is still good long term potential selling when the stock goes down is not a good reason to sell. Nor is selling when the stock goes up.
If you do pick a winner, you can do very,very well from retail stocks.
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