Brokers tip Dixons Carphone as one of 2015’s potential winners

5th January 2015

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Brokers are tipping retailing giant Dixons Carphone as a potential winning share in 2015.

In August last year Dixons and Carphone Warehouse merged, and the newly created firm’s stock has been on the up, rising 42% share in the past six months and by 25% over three. Analysts are optimistic for further gains as the market consensus has the shares firmly labeled a ‘buy’ according to Digital Look.

December witnessed Citigroup, Deutsche and Investec Securities all reiterate positive recommendations on the Currys and PC World owner, while Ian Forrest, investment research analyst at brokerage The Share Centre, is calling Dixons Carphone his share of the week.

Forrest highlighted the stock’s 2015 price/earnings ratio of 20.5, which is described as “relatively high for the sector, but that reflects the strong earnings and dividend growth forecast by analysts for the next few years”.

He said: “Dixons Carphone has been added to our ‘buy’ list due to the company’s good performance since the merger. The first interim results from the combined group were very impressive and showed like-for-like sales growth. The 11% rise in the UK and Ireland was described as “barnstorming” by the chief executive, who added that he is comfortable with market expectations ahead of the crucial Christmas trading period.

“The scale and scope of the group’s consumer electronic products makes it ideally placed to benefit from the recent steady rise in consumer sentiment in the UK. As wages begin to outpace inflation and employment levels increase, the group looks set to benefit. Analysts have been raising their expectations rapidly since the merger and with the company outperforming, this trend may well continue. The attractive share price is based on strong sales growth, the potential boost to retailers from the fall in the oil price and the benefits of scale provided by the merger.”

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