ASOS (LON: ASC) has beenof the AIMsbest performers of all time. The stock has risen over 1,300% since early 2009 even after the 50% fall sinceFebruary 2014. Koovs (LSE: KOOV) and Boohoo.com (LSE: BOO) are two smaller companies that have huge potential and could go on to challenge ASOS in the online fashion marketplace. Online retail sales are growing throughout the world and even in a mature market such as the UK, online retail sales are up 10% year on year.
Here are three pureplay online retailers that could be great growth companies to invest part of your portfolio in.
Fashion giant
The online fashion giant ASOS has beena fantastic success story for AIM in London. Like many other growth stocks, the company still trades on a high P/E of over 80 due to the good forward prospects of the company. Last monthASOSreleased interim results for the period to the end of February 2016. These results were very encouraging with profit before tax up 18% and group revenues up 21%. These results were followed by multiplebroker recommendations with price targets of up to 4,800p. ASOS is focusing on its core markets such as the UK and itseems to be paying off as this year looks set to be good for ASOS too. Net profit is forecast to grow by 10m (27%) and if this target is hit, then expect shares to sharply rerate.
Indian minnow
Koovs is a very interesting play on the growing Indian fashion and e-commerce markets. The Executive Chairman and CEOwere both on the ASOS board and the Chief Creative Officerwas an ASOS Product Director. The businessaim is to create the ASOS of India, selling western clothes to the youth population. In the most recent trading statement, the company saidsales growth was 189% year-on-year and there are now over 1m registered users on the website. The company also recently completed a placing and raised21.9m to fund business development and acquirethe rest of the shares in Koovs India.
Growing online play
Boohoo is another online retailer set to impress. Itsells own brand clothing in over 100 countries to customers between the ages of 16-24. Boohoo has performed well over the last few years and shares have doubled in just under a year. This shouldnt put investors off, the forward P/E is only 34, which is acceptable for a growth stock such as Boohoo. Importantly Boohoo haslaunched apps in the UK, Australia and US, a good strategy as increasingly consumers want to use apps for shopping.
Online retailers offer fantastic growth opportunities that may create huge returns for shareholders. ASOS isfocusing on mature markets in an attempt to continue to grow profits, but for me, Koovs and Boohoo are the mostinteresting companies. Koovs has massive potential and if it can crack the Indian market then it could become a very big company. Boohoo isperforming well and the share price should continue to rise over the next year.
Growth stocks such as Koovs and Boohoo offer huge returns but always carry an increased level of risk and must be chosen carefully to avoid losses.
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Jack Dingwall has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
