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42 167.25

Fitted Out for a 14% NASDAQ rush!

27 May 2021

There is still value in low-tech, despite the copycat stock market listings that have taken place recently on the NASDAQ exchange which favours technologically advanced companies that have recently basked in the glory of internet giants such as Airbnb, Spotify and the longer established dominant quartet Apple, Amazon, Facebook and Google.

Some of the traditionally manufactured products are those with longstanding appeal, an ideology that was maintained steadfastly by the late, great Ingvar Kamprad of IKEA, who during his lifetime's work as a flat-pack furniture warehouse mogul as among the richest men on earth and who never listed his firm on any public exchange despite its huge success.

Mr Kamprad famously drove his early-1990s Volvo 245 DL until his departure from this earth at the age of 91 in 2018, despite his multi-billionaire status. That is admirable indeed, but it is a case of taking efficiency to extremes!

North American clothing retailer Urban Outfitters has trodden a similar traditional and steady path, however a major difference is that it is listed on the NASDAQ exchange and has been a big hitter since the public trading of its stock began in 1993, when Mr Kamprad's trusty Volvo 245 was just two years old.

Therefore, analog bricks-and-mortar business Urban Outfitters has something in common with its traditional business types yet shares high status NASDAQ space with the very latest in technological innovators and dominant giants. Urban Outfitters stock has been enjoying a huge increase in value over the past few months, and the past 24 hours is no exception.

Rather unusually in a world during which governments have forced many retail shops to close for over a year, Urban Outfitters had a set of results for the first quarter of the 2022 year that have looked good not just compared to those from the early stages of the lockdown period in which a very grim future was viewed by the investing community.

The company's stock has risen by over 14%, which is remarkable indeed, and is currently approaching its five-year high of $48.28 per share in August 2018. Urban Outfitters stock began trading this morning at $39.80 per share, a huge step up from its $34.59 value yesterday, representing a sudden spike which thus far is being sustained.

Perhaps this demonstrates that the observational market participants and stock investors are looking at balance sheets and results as yardsticks rather than being scared off by lockdowns. Many Urban Outfitters products have been available for delivery in Europe and in its home market of North America, there have been far less lockdowns and greater continuity of retail shop footfall.

Revenue was up 58% from year-ago levels and up more than 7% from two years ago, which is a metric that carries considerable weight. Current CEO and President of Urban Outfitters Richard Hayne has a personal wealth of approximately $1.3 billion... and very likely does not drive a 30-year old 245 DL!

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.5% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money.
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