The growth of electric vehicle sales is reinforcing the need for dealership visits as customers are unfamiliar with the product. Physical dealerships with established aftersales operations should have an advantage over online only disruptors as the world gradually goes electric, given the need for increased specialist equipment, technology and knowledge to maintain these vehicles.
STOCK PICKS MOTORPOINT (MOTR) 338P A share price pause for breath at Motorpoint (MOTR), which Shares added to our Great Ideas list in May 2020 at 190p, presents a compelling entry point for new investors in this used car retailer with an accelerated growth strategy. With CEO Mark Carpenter at the wheel, Motorpoint focuses on selling vehicles under three years old and an agile omni-channel model suggests it can hold its own against online disruptors. Motorpoint outlined exciting new growth ambitions alongside resilient full year results in June – its new target is to at least double annual sales to over £2 billion in the medium term, of which more than £1 billion is targeted to be online sales. In the first half to September 2021, Motorpoint’s revenues sped 57% higher year-on-year, or up 14% on a two-year view, as the company benefited from
buoyant used car demand. However, full year expectations were sensibly left unchanged given uncertainty around a normalisation in used vehicle prices as the supply shortage gradually eases. Numis forecasts a pre-tax profits rebound from £9.7 million to £18 million for the year to March 2022, ahead of £25.6 million in 2023. VERTU MOTORS (VTU:AIM) 62P Robert Forrester-steered Vertu Motors (VTU:AIM) has positive forecast momentum and a strong balance sheet with at least £90 million of firepower to execute on a strong acquisitions pipeline. It is also well-equipped to fend off online-only challengers given its ongoing investments in winning digital capabilities. Buying back shares and returned to the dividend list, Vertu is now guiding to pre-tax profit of at least £65 million for the year to February 2022. Liberum notes the company has freehold property backing of £229.4 million, net cash of £57.3 million and tangible net assets of £222.6 million or 61.5p a share, meaning the trading business is effectively in for free at current levels. By James Crux Funds and Investment Trusts Editor
11 November 2021 | SHARES |
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