Watches of Switzerland Group (LSE:WOSG) has been on a growth trajectory in the past few years and it shows no signs of slowing down. However, the growth stock has seen its shares pull back recently. Could now be a good time to pick up cheap shares for my portfolio? Let’s take a closer look.
Luxury watches
You may have already guessed but Watches of Switzerland specialises in luxury Swiss timepieces. These are often considered the most luxurious and costliest watches in the world. In fact, Watches is the UK’s largest luxury watch retailer and has 16 branches in the UK with targeted growth to expand upon this.
So what’s happening with the Watches of Switzerland share price currently? Well, as I write, the shares are trading for 815p. At this time last year they were trading for 1% more at 825p. More tellingly, the shares have pulled back from 1,514p to current levels since the beginning of 2022, which is a 46% drop.
I’m not concerned by the share price drop noted above. Many markets across the world have pulled back in recent months due to macroeconomic and geopolitical factors.
To buy or not to buy
So what are some of the pros and cons of me buying the shares?
FOR: Despite macroeconomic headwinds, Watches’ target demographic isn’t usually affected much by issues such as the cost-of-living crisis. In fact, there has been an increase in newly wealthy people since the pandemic. Its position, profile and growth should continue despite current issues faced by the majority of the country.
AGAINST: For any growth stock, growing presence and performance is easier said than done. I find this is especially the case in the retail business. Many businesses have fallen foul of trying to rapidly expand. This is one key area I will keep a keen eye on developments regarding Watches of Switzerland. Competition in the luxury watch marketplace is intense too, which could impede growth plans.
FOR: I noticed that Watches has a good track record of performance showing consistent growth. I do understand that past performance is not a guarantee of the future, however. Looking back, I can see that revenue and profit have increased year on year for the past four years. This impressive growth in performance is a vital component that could underpin continued growth for the business.
AGAINST: At current levels, Watches shares do still look a bit expensive on a price-to-earnings ratio of 24. Is any growth already priced into the shares? I will keep a keen eye on developments such as performance and growth activity ahead.
A growth stock I would buy
Overall, I like the look of Watches of Switzerland for my holdings and I would be tempted to buy some shares. Its recent track record of growth and performance excites me. Furthermore, its profile and presence to date, coupled with a burgeoning market to sell its products to, make me believe it could be an excellent growth stock to buy and hold for the long term.