The ASOS share price soars 10%! Can this top growth stock still make investors rich?

first_img Enter Your Email Address See all posts by Paul Summers Image sources: Getty Images. Shares in online clothing giant ASOS (LSE: ASC) jumped 10% early this morning on news that recent trading has been far better than investors had been predicting. When you consider how brutal 2020 has been for most retailers, that’s really quite something. Is there still time for new investors to load up on this one-time penny stock and make money? Here’s my take. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…ASOS: beating expectationsDespite being confined to their homes for a significant proportion of the year so far, it seems many of ASOS’s customers were still looking for their fast fashion fix.This morning, the AIM-listed business revealed that revenue growth for its full financial year (which ends on August 31) is now likely to be between 17% and 19%. It went on to say that pre-tax profit for FY20 would now be somewhere between £130m-£150m. Considering how awful 2020 has been so far, numbers such as these are great on their own. However, it isn’t just the amount of clothes ASOS has been shifting that surprised the market.Far from buying a huge bunch of threads they don’t really intend to keep, it would appear that customers are making a lot more “deliberate” purchases. In other words, they are sending less back to the company. This is the opposite of what ASOS was expecting once lockdown restrictions were reduced. Indeed, it stated that it had seen “a significant and sustained reduction in returns rates since April”.For a company that has been forced to investigate and shut down accounts that show an “unusual pattern” of buying and returning clothes in the past, this is clearly very welcome news.  Cautious outlookAs good as today’s update is for holders, ASOS’s management isn’t getting carried away just yet. Like many listed businesses relying on discretionary spending, it highlighted that the “consumer and economic outlook remains uncertain“. There’s simply no way of knowing how long this “favourable shopping behaviour” will carry on for. Considering it’s just been confirmed that the UK is now in recession for the first time in 11 years, this all seems very reasonable. After all, a rise in unemployment translates to increased belt-tightening among ASOS’s target demographic.What’s more, the possibility of a significant second coronavirus wave — and subsequent lockdowns — is still very real. Should this happen, I suspect those forced to work from home now have all the clothes they need. High valuationAt just over the 4,500p mark, ASOS’s share price hasn’t been this high since December 2018. That said, it’s still far off the high of around 7,600p seen about two-and-a-half years ago.If it can achieve its goal of becoming “one of the few truly global leaders in fashion retail“, there’s a possibility it might one day return to this level. There is, however, a problem. In my view, many of ASOS’s qualities — a great brand, solid finances, decent earnings diversification — look to be already priced in.Before this morning’s action, the stock changed hands on an eye-watering forecast price-to-earnings (P/E) ratio of 87! That’s already a mighty price to pay for any stock, even one that’s now beating expectations.As an investor, I get nervous when nothing but perfection is expected from a company.The time to buy ASOS was back in March. So, if we get another market crash, you’ll know what to do.  “This Stock Could Be Like Buying Amazon in 1997” The ASOS share price soars 10%! Can this top growth stock still make investors rich? Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Simply click below to discover how you can take advantage of this.center_img Our 6 ‘Best Buys Now’ Shares I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended ASOS. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Paul Summers | Wednesday, 12th August, 2020 | More on: ASC last_img

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