Currys (CURY)  79.25p

Gain to date: 31.9%

We flagged the recovery potential of electricals retailer Currys (CURY) on 21 March and urged readers to buy the stock at 60.1p on the basis self-help measures were beginning to pay off and the super-size TVs-to-smartphones seller offered a compelling play on an improving consumer backdrop. Recent takeover interest had only served to highlight the underlying value on offer at the FTSE 250 technology products hawker.

WHAT HAS HAPPENED SINCE WE SAID TO BUY?

Currys’ shares have rallied 31.9% amid growing investor awareness of the company’s turnaround potential. On 14 May, the company upgraded pre-tax profit guidance once again following a ‘strong finish’ to the year ended 27 April 2024, with results (27 June) showing a pleasing 10% jump in adjusted pre-tax profit to £118 million.

CEO Alex Baldock flagged encouraging momentum in the UK & Ireland, insisted the Nordics business was getting back on track and guided for profit and free cash flow growth in full year 2025 driven by growth in high margin recurring revenue services, including reaching at least two million iD Mobile subscribers before year end.

WHAT SHOULD INVESTORS DO NOW?

Keep buying Currys. In a note published on 13 August, Panmure Liberum argued Currys’ 35% valuation discount to any others in the electricals sector is ‘overdone’ and noted the quality of revenues has massively improved with nearly £700 million of Currys’ sales now high margin service related.

The broker said Currys’ margins ‘can double from here and due to the sensitivity of the model, Currys probably offers more Alpha than most’. Even after the recent rally, the shares are swapping hands for a lowly prospective price to earnings ratio (PE) of 9.1, based on Panmure Liberum’s 8.7p year-to-April 2025 earnings estimate, which is forecast to rise to 10.3p and 11.9p in 2026 and 2027 respectively. Panmure Liberum also observed that ‘the tech replacement cycle is upon us (post Covid boom) and new AI infused products will drive incremental interest’ in Currys.

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