5 Best UK Stocks to Buy Now

1. Farfetch Limited (NYSE:FTCH)

Number of Hedge Fund Holders: 47

Farfetch Limited (NYSE:FTCH) is a London-based online marketplace for luxury clothes, shoes, accessories, and jewelry, with products available from over 700 global brands. Farfetch Limited (NYSE:FTCH) also offers a mobile application that can be accessed in multiple languages. 

Jefferies analyst Ashley Helgans noted that Farfetch Limited (NYSE:FTCH)’s partnership with Neiman Marcus embodies the company’s capacity to monetize its platform beyond the luxury marketplace and expand sales across recurring revenue channels with higher margins. With the shares down 50% year-to-date and “multi-year growth drivers,” present levels of Farfetch Limited (NYSE:FTCH) reflect a “compelling” entry point, the analyst told investors in a research note. She kept a Buy rating on the shares with a $25 price target on April 6.

The company’s revenue in 2021 stood at $2.25 billion, up from $1.6 billion in the earlier year. The 2021 net income of $1.46 billion sharply rebounded from 2020, when the company posted a loss of $3.3 billion. 

According to Insider Monkey’s Q4 data, 47 hedge funds were bullish on Farfetch Limited (NYSE:FTCH), with combined stakes exceeding $2 billion. Stephen Mandel’s Lone Pine Capital held the biggest position in the company, owning 24.4 million shares worth $817 million. 

Here is what RiverPark Large Growth Fund has to say about Farfetch Limited (NYSE:FTCH) in its Q4 2021 investor letter:

“Farfetch: FTCH shares struggled in 2H21 as consumer behavior remains hard to forecast, supply chain disruptions continue to be elevated, and Apple’s App Tracking Transparency changes make customer outreach difficult and more expensive. Despite these headwinds, which we believe to be transitory, Farfetch still reported 28% gross merchandise volume growth, 33% revenue growth, and 43% gross profit growth.

In March, we had established a small position in this leading online luxury fashion retail platform. The company is benefitting from the secular trends of growing ecommerce, the global market for personal luxury goods, and emerging market growth, particularly in China. Luxury fashion has much lower online penetration than general ecommerce, and Farfetch is differentiated because it has developed long standing relationships with image conscious luxury product companies. Because of this focus, Farfetch has both higher average order values and higher take rates relative to peers, driving higher gross margins. We believe the company can grow revenue and EBITDA more than 20% and 50% per year, respectively, for the foreseeable future. With its extremely low capital needs—capital expenditures were less than 2% of revenue last year—we expect the company’s free cash flow to grow even faster.”

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