Several major UK shares are set to report high earnings growth next year after a bumper Christmas spending spree.
Recent data from analytics platform Stocklytics reveals that Tesco added £1bn in value over the Black Friday weekend! According to the report, that’s enough to “pay for over 36,000 delivery drivers a year“.
Naturally, Amazon took the lion’s share of sales, adding £110bn in the same period.
But while Black Friday may have filled many stockings, a lot of spending is still to come. I think the following two retail shares are well-positioned to enjoy more sales as Christmas nears.
Curry’s
Dating back to 1884, high-street electronics giant Curry’s (LSE: CURY) is a household name in the UK. This makes a popular choice for those last-minute gift grabs on the way home from work on Christmas Eve. Guilty!
From speakers and smartwatches to kid’s toys and electric razors, it’s packed with simple gift ideas.
But that’s not why I bought the stock earlier this year.
After rejecting takeover bids from Elliot and JD.com in February, Curry’s share price jumped 45% in a matter of days.
At the time, the price had been in decline since April 2021, losing 70% of its value. However, the company was confident the offers “significantly undervalued” it.
It seems it was right, as the price has continued to climb since.
Now up 73.4% over the past 12 months, it’s nearing the highest level in two years. Cost-cutting exercises combined with AI-enabled laptop sales and an improved online store helped drive the growth.
But as online shopping takes centre stage, it risks losing market share to the likes of Amazon and eBay. It must continue to innovate with unique products and competitive pricing if it hopes to remain relevant.
Still, if I had the spare cash, I’d buy more of the shares today.
Card Factory
Card Factory (LSE: CARD) is a gift and party supply store based in Wakefield, UK. Naturally, it’s the type of store to enjoy increased sales over Christmas.
After listing on the London Stock Exchange in May 2014, it initially did well. The price rapidly grew from 200p to a high of 399p in September 2015.
However, recent performance has been disappointing, with the price down 40% in the past five years. This follows a devastating crash in September after its half-year earnings failed to impress.
Earnings for the period decreased by almost 50%, falling from £19.2m to just £10.5m. This was despite a 5.9% revenue increase, suggesting the company may be overspending.
If earnings don’t improve over the Christmas period, the share price could tank further.
But the low price could also be an opportunity. With earnings forecast to increase, its forward price-to-earnings (P/E) ratio is way below average, at 5.9. The stock also has decent analyst coverage, with an average 12-month price target of 166p — up 83.8% from the current 90p price.
But that trajectory could be derailed if key competitor, Moonpig, steals its sales. The popular online card company is arguably better known, having spent a lot on marketing. However, with a price up 67.5% this year, it’s less likely to enjoy the same growth as Card Factory.
I only recently bought the share so I don’t plan to buy more now. But I’m enthusiastic about the company’s future.
The post 2 undervalued UK shares to consider buying before Christmas appeared first on The Motley Fool UK.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Mark Hartley has positions in Card Factory Plc, Currys Plc, and Tesco Plc. The Motley Fool UK has recommended Amazon, Moonpig Group Plc, and Tesco Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
