The growth story for the retail conglomerate is far from over, according to this expert
The post Premier Investments (ASX:PMV) share price has room to grow: expert appeared first on The Motley Fool Australia. –
The Premier Investments Limited (ASX: PMV) share price has been a steady mover this year, up around 17% year-to-date to $27.98.
Shares in the retail conglomerate have held up relatively well, especially taking into consideration the recent lockdown extensions and broader market volatility.
The Premier Investments share price remains just 5% away from its recent all-time high of $29.35.
In a recent interview by Livewire, Nathan Hughes from Perpetual Limited (ASX: PPT) and Mike Murray from Australian Ethical Investment Limited (ASX: AEF) talked about their selection criteria for uncovering “the next small-cap champions”. In doing so, Hughes also highlighted some more mature opportunities in the retail space.
Characteristics for being a ‘small-cap champion’
Hughes said the first thing he looks for is a “long growth runway”.
“It’s not about having an enormous potential market or a lot of excitement around it, it’s about being in an industry that’s growing and looking for a sustainable runway for continued growth,” he said.
“And that may be through new products, the rollout of an existing store footprint, new verticals, or even sensible bolt-on M&As.”
He also talked about a company’s effective use of funds to bolster growth, saying:
“The other thing we look for is attractive returns on capital. Companies that can deploy capital well and generate really high rates of return can really accelerate their growth and become quite exciting investments.”
But the Premier Investments share price isn’t a small cap?
Premier Investments is far from being a small cap, boasting a market capitalisation of about $4.4 billion.
Despite sitting at the larger end of town, Hughes believes the company still has plenty of room to grow.
“It’s [Premier Investments] a company that’s done tremendously well, rolling out Smiggle and Peter Alexander, and more recently it’s had a lot of success online with huge scope for continued growth there,” he said.
“That’s both in taking those brands into additional markets and continuing to grow their online presence. Even though that’s grown nicely, we still think there’s a long runway ahead of that stock.”
At the time of writing, the Premier Investments share price is down 1.93% to $27.98.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Australian Ethical Investment Ltd. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.