Share Centre stock of the week: Dixons Carphone
Dixons Carphone is our share of the week this week as expectations rise on the basis that the company may have been one of the biggest beneficiaries of the Black Friday sales weekend. The company is one of Europe’s largest consumer electrical and mobile telecoms retailers and the scale and scope of its products make it ideally placed to benefit from the steady rise in consumer sentiment in the UK. Investors should note that this should continue as wages begin to outpace inflation and employment levels increase.
An update in September saw the company report a rise in like-for-like sales in the UK of 10% in the first quarter, helped by increased mobile phone sales. Sales depend heavily on the new product cycle and so the recent release of the latest Apple iPhone should help to keep the company on track for another successful trading period.
We currently recommend Dixons Carphone as a ‘buy’ for medium risk investors seeking both growth and income due to the strong sales growth, the potential boost to retailers from the fall in the oil price and the benefits of scale provided by the merger. Analysts have been raising their expectations rapidly since the merger and with the company outperforming that trend looks likely to continue.