Market share gains to fuel Motorpoint
MOTORPOINT (MOTR) 241p
Gain to date: 26.8%
Original entry point: Buy at 190p, 14 May 2020
Our positive stance on second hand car specialist Motorpoint (MOTR), based partly on a return to work tailwind, is a bumper 26.8% in the money.
And we are staying positive on the nearly new vehicle seller given its strong balance sheet and scope for further market share gains.
Full year results (14 Jul) reflected the impact of the Covid-19 crisis and the subsequent lockdown on the key March trading period, with site closures behind a 15.3% drop in pre-tax profit to £18.8 million. Motorpoint understandably decided to pull the final dividend.
However, the positive news was Motorpoint’s encouraging restart post lockdown, with current trading stronger than anticipated and ahead of the same period last year, margins said to be robust and cash levels significantly ahead of the year-end balance and trending positively.
At this stage, it is too early in the unlocking process to decipher whether recent weeks reflect pent up demand or a return to more normal trading conditions, but Motorpoint is seeing strong web traffic and has also invested for the post-coronavirus future via a move towards automation with fully contactless sales routes.
SHARES SAYS: Keep buying.