Currys (CURY) 79.5p

Gain to date: 32%

We highlighted Currys’ (CURY) exciting recovery potential on 21 March and urged readers to buy at 60.1p on the basis the electricals retailer’s self-help measures under CEO Alex Baldock’s leadership were starting to pay off and the washing machines-to-smartphones seller offered a compelling play on the improving consumer backdrop.

Shares also suggested that while Currys had successfully fended off recent suitor Elliott, the emergence of other predators shouldn’t be ruled out and the recent takeover interest highlighted the FTSE 250 tech products seller’s strong underlying value.

WHAT HAS HAPPENED SINCE WE SAID TO BUY?

Shares in Currys have sparked up 32% to 79.5p with investors plugging into the turnaround potential of the super-size TVs-to-tumble dryers purveyor, whose stock is now trading well above Elliott’s top bid of 67p.

On 14 May, Currys upgraded pre-tax profit guidance for the third time this year following a ‘strong finish’ to the year ended 27 April 2024, with like-for-like sales growth of 2% in both the UK and the Nordics in the 16 weeks to 27 April implying firm share gains in some tough markets.

‘Our performance is strengthening,’ insisted Baldock. ‘With good momentum in the UK & Ireland, and with the Nordics getting back on track. Sales are now growing again, margins are benefiting from higher customer adoption of solutions and services, and cost discipline is good.’

WHAT SHOULD INVESTORS DO NOW?

Keep buying Currys for its re-rating scope and the potential for future takeover interest. Even after the recent rally, shares in Currys are swapping hands for a grudging 8.5 times the 9.4p of earnings Berenberg forecasts for the current financial year.

The broker sees Currys as ‘a sound way to play the expected improvement in UK retail demand’ and expects the significant valuation discount to peers to diminish ‘as trading momentum continues, indebtedness reduces further and growth accelerates’. 

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