AIM stocks to buy in July - Great Upside Opp to 6000!!!8 Jul 2021 11:30
"One stock that strikes me as a ‘buy’ right now is online fashion retailer ASOS (LSE: ASC), the largest in the FTSE AIM 100 index. It’s underperformed in 2021 due to the fact that investors have been focused on reopening stocks. I think this underperformance has created a buying opportunity.
ASOS has grown consistently in recnt years. Over the last half-decade (FY2015 to FY2020), revenues climbed at an annualised growth rate of 23.4%. Looking ahead, further growth is expected. For FY2021 and FY2022, City analysts expect revenue growth of 23% and 18% respectively. I don’t think this level of growth is fully reflected in ASOS’ valuation. Currently, the stock trades on a forward-looking P/E ratio of 34, which isn’t particularly high for a growth stock.
One risk to consider here is competition from other online retailers. Not only does ASOS face rivalry from other fashion retailers such as Boohoo but it also faces competition from larger online retailers such as Amazon.
However, see the overall risk/reward proposition here as attractive. I’d buy the stock while it’s a little out of favour."