This is #8 in our "Twelve Stocks of Christmas 2025" Series. You can review the full set here.
The Pitch
Frasers (LON:FRAS) is a main-market-listed retailer. With a StockRank of 91, many subscribers will have heard of this SuperStock’s stores, trading under well-known marques, such as Sports Direct, House of Fraser, USC, GAME and Evans Cycles. In an incredibly tough retail environment, this business stands out as one that has the financial strength to take advantage of the weakness of others. Indeed, the company regularly acquires brands or assets, where Frasers’ feels that they could run them better than the existing management.
The Big Picture
Frasers is my Value pick for the “12 Stocks of Christmas” with a Value Rank of 91.
- Single-digit P/E: A forward P/E of less than 7 suggests that this business is ex-growth. However, it has a strong track record of entrepreneurial and opportunistic growth, which I don't see diminishing over the long-term.
- Large liquidity: The company has around £1bn of debt, but this is more than offset by £600m of investment properties, and £1.2bn in quoted and unquoted investments. A recent refinancing saw them increase their debt facility to £3.1bn, giving them a huge £2bn of liquidity that could be deployed on acquisitions.
- Operational gearing: Although sales have only grown by 5% pa, this has led to EPS compounding at 17% CAGR over the last five years. The majority of earnings end up as free cash flow over the long-term.
Going Deeper
Frasers has developed what they call an Elevation Strategy. This focuses on brands, products, digital, and store experiences. They aim to put the old Sports Direct model of selling sports equipment and clothing at the lowest price behind them and now split their sales into three categories: sport, premium, and luxury. Selling higher-end brands and products has become as important as sporting goods.
These are the key elements of this strategy:
- Brand partnerships: building relationships with the best brands in the sports, premium, and luxury sectors.
- Store experience: Investing in creating flagship stores with digital tech and an improved layout.
- Digital: Investing in digital innovation.
- Brand acquisition: The company has never backed away from being a brand owner as well as a retailer.
- Membership schemes: In 2023, they launched Frasers Plus, which is a buy-now, pay-later credit supplier and reward scheme.
There are several reasons that Frasers looks…
