Gamble of the week: Turnaround electronics retailer

Not long ago, people were wondering whether this electronics retailer was to become another victim of Britain’s high-street bloodbath. At the end of 2011, you could have picked up a share for less than 10p.

Since then it has done a pretty good job of turning itself around. There’s no doubt that it has been helped by the demise of rivals such as Comet and the boom in gadgets like tablet computers. But it has also been getting out of unprofitable businesses and slimming down its store portfolio.

Market share data shows that it is also holding its own against cutthroat internet retailers such as Amazon and AO.com.

Dixons share price chartDixons (LSE: DXNS) has shown itself able to make money throughout the year rather than being overly reliant on Christmas. Profits have grown strongly over the last couple of years and are expected to keep on doing so for the next two years.

Then there’s the prospect of a tie-up with Carphone Warehouse to create a new retailing giant. A combination of the two would probably see lots of costs being cut and increased buying and selling power in tablet computers, which should push profits up.

Dixons shares are no bargain on 16 times this year’s expected earnings. But with the potential for profits to keep on powering ahead, they are still worth buying.

Verdict: buy at 45p

66% off newsstand price

12 issues (and much more) for just £12

That’s right. We’ll give you 12 issues of MoneyWeek magazine, complete access to our exclusive web articles, our latest wealth building reports and videos as well as our subscriber-only email… for just £12.

That’s just £1 per week for Britain’s best-selling financial magazine.

Click here to take advantage of our offer

Britain is leaving the European Union. Donald Trump is reducing America’s role in global markets. Both will have profound consequences for you as an investor.

MoneyWeek analyses the critical issues facing British investors on a weekly basis. And, unlike other publications, we provide you with the solutions to help you turn a situation to your financial advantage.

Take up our offer today, and we’ll send you three of our most important investment reports:

All three of these reports are yours when you take up our 12 issues for £12 offer today.

MoneyWeek has been advising private British investors on what to do with their money since 2000. Our calls over that period have enabled our readers to both make and save a great deal of money – hence our position as the UK’s most-trusted investment publication.

Click here to subscribe for just £12