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16 February 2020
By Maynard Paton
Cash flow movements can often indicate whether or not a business enjoys a powerful operational advantage.
A strong business might:
- Receive customer payments upfront for goods/services it has yet to deliver, and/or;
- Pay suppliers months after goods/services have been received.
However, a weak business might:
- Receive customer payments months after its goods/services have been delivered, and/or;
- Pay suppliers upfront for goods/services it has yet to receive.
SharePad allows us to easily pinpoint companies that operate with advantageous cash flow movements. Boohoo, the prominent online fashion retailer, offers a good example of what to look for.
Read my full Boohoo article for SharePad.
2 thoughts on “[SharePad] Screening For My Next Long-Term Winner: Boohoo”
I know you’re not giving a buy recommendation but would you ever even consider getting involved in fashion retail stock?
Im interested because I personally just ignore the whole sector due to its appalling characteristics.
Theyll always be the odd or two one that do well and some times even over a sustained period (you list a couple in Next and JD) but really these are defying gravity and are only ever one announcement away from a crash.
Thanks for the comment. I did own French Connection shares for a few years, but sold them a few years ago. Once fashion retailers go off the boil, history suggests getting back to their former glories is almost impossible. Fashion changes quite quickly, and a lot is dependent on the creative talent at the top — who can ‘burn out’. Next is developing an online ‘platform’ to sell other branded clothes, so that development may offer greater predictability. But overall I am not a fan of the sector.