I bought at 1088.86p. It forms 6.7% of my portfolio at close of today.
So why Next? I've so far been holding fire on Retail shares, expecting a better purchase price next year. But having looked at Next, M&S and Debenhams, I think they're all cheap and Next is the pick of the bunch. I don't expect it to survive unscathed, but I think it's the only one of the three that could take a hit of 10% of revenue (assuming costs remain the same) and keep on going without a major crisis. Debenhams would take a big loss. M&S would break even. Next would still make a moderate profit. Obviously if sales really fall that much they would save money on the cost of sales, lay off staff, etc... It was just an idle test of their profitability.
Cash flow is also extremely strong. M&S spends all of its cashflow on purchase of property, plant and equipment. Who knows what that really means? Next spends its cashflow on share buybacks and dividends. Nice.
Next is the pick of the bunch because:
- It has a substantial margin which provides a buffer in a downturn.
- It has a fantastic history of buying back shares.
- It doesn't have excessive gearing.
- In the long-run it is focusing on the right market.
I would like to see Next fall in price next year and give me the opportunity to buy more shares at a cheap price. But given that I've decided I want to take a significant position in the share, I see little point delaying my first purchase. Here's hoping I make a short-term loss and get the bulk of my shares at a favourable price.
Emerging ETFs
I'm starting to rue my investment in emerging market ETFs. Not because they've fallen in price, but because I'm not convinced they're the best way to take advantage of emerging markets, and also because the amounts I've invested are too small to make sense.
For now, since I expect a strong cash inflow over the next few years, I won't sell. But if an opportunity arises that requires the sale of my emerging ETFs, I won't hesitate. Their days are numbered.
No comments:
Post a Comment