THE TIPSTER | ASOS hoping for a change of look
ASOS took something of a beating when it released its trading statement last month, dropping 17 per cent. The hitherto-relentless growth in sales was revealed to have slowed somewhat, even though international sales continued to show excellent growth. ASOS has become a slave to its own excellent performance, and it will need a strong showing from the final results on Thursday if the shares are to recover their trendy status. IG’s price on ASOS is 1,538p-1,548p.
The LCG UK 30 index struggled to bounce when the FTSE 100 did recover a little on Monday. This would suggest that investors are sceptical that the UK economy is going to recover meaningfully anytime soon especially as this week sees the second reading of UK GDP for the first quarter which is set to confirm the double dip recession. Capital Spreads quotes 9,583-9,600 for the LCG UK 30 index.
With the rise of the middle class in China helping the luxury goods sector escape the worst of the sell off in recent weeks, and given that China’s retail sales expanded by 14.1 per cent year-on-year, one could expect that Burberry will reveal a stellar set of figures this Wednesday. A 25 per cent leap in profits is on the cards to £376m on the back of demand in Europe but in particular the emerging economies. CMC Markets quotes 1,391.31p-1,394.70p for Burberry.
SABMiller is well placed to weather the Eurozone storm. Earnings due this week are expected to show a 7 per cent rise in sales and the much publicised takeover of Fosters demonstrates the company’s aggressive expansion plan, increasing market share in developing countries. As a result, the company is less exposed to a slowdown of exports to EU countries. The company also enjoys a watertight balance sheet with return-on-assets higher than its competitors and recent acquisitions should lead to improved efficiency, something which will be reflected in future earnings. Spread Co quotes 2,436.69p-2,441.35p for SABMiller.