Burberry (LSE: BRBY), ASOS (LSE: ASC) and Blinkx (LSE: BLNX) all released trading updates today, bringing a mixed response from the market. Should you consider adding these stocks to your portfolio?
Blinkx
Online video platform Blinkx topped the risers board in mid-morning trading, with its shares soaring 23%.
After making hay for a few years, Blinkx has struggled recently as it shifts to industry growth areas of mobile, video and programmatic advertising, while managing the decline of historical product lines thathave now become non-core.
Todays Q3 trading update (covering 1 October to 31 December) told us that the companys revenue performance was in line with management expectationsbut gave no number. The revenue performance (whatever it was), combined with cost-cutting, put profitability ahead of management expectations, achieving break-even on an adjusted EBITDA basis during the Period.Thats a huge improvement on a $6.8m adjusted EBITDA loss in H1.
EBITDA stands for earnings before interest, tax depreciation and amortisation and the companys adjusted EBITDA also excludes stock based compensation expense, and acquisition and exceptional costs. Blinkx didnttell us its cash position at the end of the period (unlike in previous trading updates), but I think we can assume the company is still losing cash from its operations.
Todays update certainly paints a brighter outlook and the market clearly likes it, but I would be inclined to wait for the detailed full-year numbers before considering investing.
ASOS
Online fashion retailer ASOS updated on trading for the four months to 31 December, and its shares have ticked modestly lower to around 3,100p.
The company reported revenue of 460m for the period, up 23% (27% at constant exchange rates). The number of active customers increased by 18%, and the average order frequency, average basket value and number of orders also increased. A modest decline in retail gross margin isnt a concern when the payoff is strong growth in number of customers and revenue.
ASOS trades on a sky-high forward price-to-earnings (P/E) ratio of 57, but Ive written before that I believe this cash-rich company with a long growth runway could be a great buy in spite of the high earnings rating. I stick by that view after todays trading update.
Burberry
Luxury fashion house Burberrys Q3 trading update (for the three months to 31 December) contained mixed news, and its shares are little changed at 1,112p.
The company reported a tougher environment than expected in Q3. Comparable sales were unchanged from the same period in the previous year, although improved from a Q4 decline of 4%.
Hong Kong (comparable sales down over 20%) and Macau continued to be a drag on performance, but perhaps surprisingly, mainland China returned to growth. Elsewhere in the world there were positive performances, with digital sales outperforming in all regions.
The outlook for luxury remains uncertain for the moment, but Burberrys timeless British fashion offering has great appeal worldwide, and I believe the company has a bright long-term future. The short-term outlook has sent the shares down more than 40% from their 52-week high, and Burberry looks very buyable to me on a forward P/E of 15.
I may be bullish on the prospects of ASOS and Burberry, but our leading growth analysts have identified another company in the sector as A Top Growth Share From The Motley Fool.
You see, the company in question has confounded value investors for years by consistently exceeding the growth priced into the shares. What’s more, our analysts reckon the company has the potential to increase its current value threefold in the not-too-distant future.
To read all about why our experts are so excited about this company’s prospects – simply click here for your free, no-obligation copy of the report.
G A Chester has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended Burberry. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.