The Premier Investments Limited (ASX: PMV) share price has had a solid 2019 so far, banking an 11.7% return since January (not including dividends). Although this is good news for PMV shareholders, the stock is still a ways off its 52-week high of $20.16, which it hit in September last year. So is Premier Investments a buy today?
What does Premier Investments d0?
You may not have heard of Premier Investments, but it is highly likely you have heard of at least some of its brands. The company owns the Just Jeans chain, as well as Jay Jays, Smiggle, Peter Alexander and Dotti – making Premier Investments a big player in the Australian retail space. The company also has a 28% stake in appliance maker Breville Group Ltd (ASX: BRG).
Premier Investment’s chairman is Solomon Lew, a highly regarded businessman and a famous investor in his own right.
The company has done a remarkable job of positioning itself for the digital age. Its Smiggle and Peter Alexander stores in particular have carved out a niche brand for themselves and remain highly popular with their respective target markets.
Smiggle has been a stand-out performer, with global sales increasing 58% over the past two years (to 2018), and 67% of its sales coming from outside Australia. Peter Alexander has also proved a highly successful brand for Premier, with sales also up 32% for the two-year period.
Is Premier Investments a buy?
Looking in, there is a lot to like about Premier Investments. In my opinion, the company has done what many have failed to do – establish a strong and sustainable presence in the retail space, with a robust online storefront to boot. Although many retailers are feeling the Amazon-effect, I feel Premier is well positioned to protect its brands and niches well into the future. Its stake in Breville has also proved a winner, with Breville shares up 123% over the past five years (not including dividends).
It’s worth noting that Premier shares are trading for a slight premium in the market at current prices. At the time of writing, PMV shares are swapping hands for $16.12, which gives them a price-to-earnings ratio of 30.6, which is high by comparison to the market. In saying this, PMV is currently paying a dividend yield of 4.1% on current prices, which makes PMV a good income stock at current times.
I think Premier Investments is a quality company and one of the best retail picks if you are looking for some exposure to that space. Saying this, the current price is a little pricey for me personally at the present time, but its dividend yield is at an attractive level for income investing.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.