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of FTSE100of Next (LSE: NXT) stocks are backed by what appears as “Quality Business” on the investment screen.
The company operates as a hybrid fashion and lifestyle retailer, with both internet and brick-and-mortar sales. It is a well-known presence in the fields of clothing, footwear, accessories, beauty and homeware.
good quality index
You can get a sense of your company’s quality attributes by looking at some commonly used metrics. For example, the return on equity is approximately 35%. And the operating margin for this business is just over 19%.
On top of that, the company has a solid financial and transactional record, but numbers plummeted when the pandemic hit. Not surprising for
In short, Next is probably a desirable stock for investors to own. diversified long-term portfolio. And one of the only issues to consider is valuation. After all, paying too much can be a poor investment, even for a quality company.
But do quality investments really pay off? And have Next’s undeniable attributes worked to preserve shareholder wealth during the past five difficult years? Here’s a spoiler – yes they have!
Five years ago you could have gotten some shares for about 4,614 pence a share. And as I wrote him on Thursday 2nd March they are changing hands on his 6,874p. So the stock is up 2,260p.
But that’s not all. The company has a decent dividend track record. And during this period the shareholder has collected a total of 790.5 pence worth of payments per his share. Add this to the increase in the stock price and he will get a total profit of 3,050.5 pence per share, or about 66%.
tough year ahead
So a £1,000 investment in Next Equities five years ago is now worth around £1,660. Transaction costs shave a bit of that return off if you sold the stock now and cashed in outright.
Nonetheless, Next has been a solid performer and should have provided adequate support to the portfolio through difficult times.
And looking ahead, the business seems likely to offer more to shareholders in the long run. Because nothing is guaranteed, even quality companies with strong trading niches can run into operational problems from time to time.
Nonetheless, the statement delivered on January 5th was bright. At the time, the business had just surpassed expectations during the Christmas period. Although the directors have also expressed caution for the next year ending in January 2024.
Their best estimate was that list price sales were likely to fall by 1.5% at the end of the year. Pre-tax profit about 7.6%. Meanwhile, Citi analysts expect earnings to fall about 10% this year.
Investors may want to delve into their own deeper research now. And we’ll get another update from the company in our full-year results report scheduled for March 29th.
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