Comet is the latest high-profile casualty of a retail market that has changed forever. The internet has empowered consumers, giving them the knowledge they need to seek out the best products for the best price. A few clicks of a mouse and you can have what you want delivered to your door without too much hassle. Why bother going to the shops?
This leaves companies like Argos, Mothercare and Dixons with big problems. They have lots of stores with lots of staff and lots of stock. This puts them at a massive cost disadvantage. Throw in the problems of car parking and you have to give customers good reasons to go and shop there. Without a decent product range and top-notch customer service, a slow death beckons.
So what's in store for car parts and bike seller Halfords? This company is in a bit of a mess too. It is battling with online competition and has a pretty mixed reputation for customer service. Profits at its retail stores fell by nearly a quarter during the first six months of the year. But there's good reasons to think that it might just survive and prosper.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
I think Halfords is a turnaround story. Former Pets-at-Home chief executive Matt Davies is now running the show. He comes with a good track record and has a chance to put things right. Halfords has the chance to create a brand in an area where there is presently little trust cars and car maintenance. Rightly or wrongly, people believe that finding a reliable garage that won't rip you off is hard. It's also handy to have someone to fit tricky accessories such as roof bars.
Halfords Group(LSE: HFD)
With its chain of autocentres and range of car parts, Halfords has the chance to gain lots of customers. After all, you cannot get your car serviced over the internet. There is also a big opportunity in company car fleets.
Halfords is also training up its staff and selling better bikes and camping equipment (cycling is growing in popularity, but Halfords has sold pretty duff bikes for a long time now). Changes like these should attract more customers.
Halfords generates surplus cash and does not have dangerous levels of debt. The shares have rallied since July's profit warning, but still offer a free cash flow yield of over 10%. Davies is heavily incentivised to deliver the goods, so the shares look worth a gamble.
VERDICT: SPECULATIVE BUY AT 343p
-
Widow’s warning: Are you missing out on up to £11,000 in inherited state pension?If your late spouse built up contributions under the old state pension, you could be entitled to inherit a portion of it. What are the rules and are you eligible?
-
How much should I have in savings? Average savings by ageWe look at how much you should aim to have in your savings at every decade of your life, and how you can go about achieving this.
-
Somero: trading this overlooked bargainFeatures Mechanical-screed maker Somero dominates its niche and is attractively valued. Matthew Partridge picks the best way to trade it.
-
How to find big profits in small companiesCover Story The small- and micro-cap sectors are risky and volatile. But with careful research and patience, investors could make huge gains. Matthew Partridge explains how to find the market’s top tiddlers.
-
The hidden gems on Aim, London's junior marketFeatures Aim, London’s junior market, is risky – but you can find solid stocks at low prices. Scott Longley reports.
-
Three Aim-listed firms that will thrive in a post-Brexit worldOpinion Matt Tonge and Victoria Stevens of the Liontrust UK Smaller Companies Fund pick three Aim-listed firms that will survive Brexit turmoil.
-
Fetch! The Chinese small-cap stocks to buy in the Year of the Dog
Opinion Each week, a professional investor tells us where she’d put her money. This week: Tiffany Hsiao of Matthews Asia selects three Chinese small-cap stocks with exciting potential.
-
Small and mid-cap stocks with big potential
Opinion Professional investor Guy Anderson of the Mercantile Investment Trust selects three small and medium-sized firms with promising prospects that the market has missed.
-
Get cheap, reliable growth from smaller companiesFeatures One of the most reliable long-term investment trends is the long-term outperformance of smaller companies over blue chips. Max King picks some of the best ways to buy into this growth.
-
Now the bitcoin bubble’s burst, what’s the next big thing?Features Forget bitcoin, if you want to increase your wealth faster than most other people, you need to find the next big thing. Merryn Somerset Webb suggests some places to look.
