As the retailer group Dixons Carphone, owner of Currys, prepares for the most critical part of its trading year, recent UK retail sales have shown the best growth in 14 years. With Christmas shoppers set to take advantage of the firm’s Black Friday offers. The scale and scope of its consumer electronic products makes it ideally placed to benefit from the recent steady rise in consumer sentiment in the UK. That should continue as wages begin to outpace inflation and employment levels increase.

Since Dixons and Carphone Warehouse merged the company has beaten market expectations and benefited from less competition in the sector. Continuous, rapid innovation in consumer technology drives a steady flow of demand with new developments such as the rollout of 4G services for mobile phones and higher resolution ‘smart’ television. The firm depends heavily on such technology developments as well as on the new product cycle, so big mobile phone and TV launches, are very important for the company.

The 2018 PE of 10.5 is relatively low for the sector, whilst the prospective dividend yield of 3.3% is also relatively good compared to peers. We retain our buy recommendation due to the strong management and benefits of scale provided by the merger, but investors should note that the risk level is now medium to high as the full impact of the Brexit vote on the UK economy and consumer spending has not yet been seen.