Boohoo’s share price has risen 627% in five years! Will history repeat itself?

Fast fashion retail store Boohoo (LSE: BOO) 2020 was a mixed year.Pandemics caused confusion and terrible investigations cast dark clouds on popular people FTSE-AIM stock. However, online sales growth was strong as Covid-19 accelerated the transition of consumers to e-commerce. So does 2021 offer the opportunity to bring more wealth to clean and loyal shareholders, or does the buyer need to be careful?

Stock price volatility

Founded in 2006 and based in Manchester, the company Penny stock Sell ​​cheap clothes to a fashion empire worth £ 4.3 billion.It was released in London Stock Exchange In 2014, it will be 85p per share. It dropped to 25p by the following year and soared until mid-2017. Since then, Boohoo’s share price has been very volatile, but never below £ 1.

Focus on M & A

Boohoo has a clear M & A growth strategy in recent years and has made several major acquisitions. This has undoubtedly had a profound impact on the company in e-commerce and fast fashion.

These acquisitions include: Karen Millen, PrettyLittleThing And A nasty gal. Recently acquired the online side of Debenhams, Provides key customer data. It has also transformed Boohoo into a profitable cosmetology world, now a £ 12 billion market in the UK. The acquisition hopes that the acquisition will accelerate its ambition to become a leader in fashion and beauty e-commerce.

With enough cash in the bank, Boohoo is expected to continue the acquisition.

Pandemics have devastated traditional high-street retailers, but online retailers see a bright future. This gives Boohoo a competitive advantage, as so many popular brands are under its belt. Young target markets aged 16-30 like to look good both online and offline. They also tend to have disposable income for affordable fashionable clothing.

With this in mind, Boohoo’s growth trajectory could be very similar to the last five years. However, there are headwinds that cannot be ignored.

The fashion industry is one of the largest causes of pollution worldwide. With increasing attention to ESG investment and sustainability, investors may look elsewhere. It can also increase the cost of a company to respond to regulatory changes. And if inflation raises an ugly head, fast fashion may not be affordable.

Last summer, the company was involved in an investigation into the exploitation of workers making Boohoo’s clothes at a Leicester factory. Nasty gal brand. This is addressed with plans to include higher supplier standards, provision of education and training programs for staff and suppliers, and a new plant in Leicester. Exclude Subcontract. Meanwhile, last month it announced that it would invest £ 50m in a fourth warehouse to increase capacity. This will create up to 1,000 jobs over time.

Boohoo Financials

Boohoo doesn’t offer dividends and I think the stock price is pretty high. The price-earnings ratio is 62 and the earnings per share is 5p.

Boohoo’s share price is down 21% from its 52-week high and up 72% from its 52-week low. I think this is a perfect indication of the volatility of this stock. There are no plans to buy Boohoo shares at this time.

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Top share with great growth potential

Knowledgeable investors like you will not want to miss this timely opportunity …

This is your chance to discover exactly why Motley Fool UK analysts were so excited about this “pure” online business (despite the pandemic!).

Not only does this company enjoy a dominant position in the market …

However, its light capital and highly scalable business model previously helped make that happen. Consistently high sales, Astonishing margin of nearly 70%,and Rise Shareholder Returns … In fact, in 2019, we returned more than £ 150 million to shareholders through dividends and repurchases.

And this is the really exciting part …

COVID-19 may have cast a curve on the company, but management has acted swiftly to ensure that the business is properly positioned to survive the current uncertainties … in fact. Our analysts believe it should come back to life, as soon as normal economic activity resumes.

That’s why, given that the stock seems to be trading at a fairly demanding valuation for the year to March 2021, now is the perfect time to start building your own stock in this exceptional business. I think it’s time.

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Kirsteen does not have a position in any of the shares mentioned. The Motley Fool UK recommends the boohoo group. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by exploring different insights, Better investors than us.

Boohoo’s share price has risen 627% in five years! Will history repeat itself?

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