MINISO Group Holding Ltd. (NYSE:MNSO): A Top Pick for Affordable Growth Investors

Investors looking for growth opportunities at fair prices often consider the "Affordable Growth" strategy, which focuses on companies with strong growth potential and reasonable valuations. This method looks for stocks with a growth rating above 7, solid profitability and financial health, and a valuation score above 5, ensuring the company is not overpriced. MINISO Group Holding Ltd. (NYSE:MNSO) meets these criteria, making it an attractive option for those seeking growth at a fair price.

Growth: A Key Factor for MNSO

The company’s growth metrics are impressive, scoring an 8 out of 10 in ChartMill’s Growth rating. Key details include:

• Past Growth: Over the last year, MNSO’s earnings per share (EPS) rose by 31.90%, while revenue grew by 21.15%. Long-term trends are even stronger, with EPS increasing at an average annual rate of 73.50% over several years.
• Future Expectations: Analysts predict continued growth, with EPS expected to rise 19.54% annually and revenue projected to grow 18.22% per year. This forward-looking growth, along with improving revenue trends, indicates ongoing momentum.

For an Affordable Growth strategy, strong growth is crucial—it shows a company’s ability to increase earnings without relying only on market optimism. MNSO’s history and forecasts fit this need well.

Valuation: Priced for Potential

Despite its growth, MNSO remains fairly valued, scoring a 6 in Valuation. Key points include:

• Reasonable Multiples: The stock trades at a P/E ratio of 16.78, below both the industry average (35.82) and the S&P 500 (26.51). Its forward P/E of 11.52 further highlights its affordability.
• Growth Adjustment: The PEG ratio, which adjusts the P/E for growth, suggests a fair valuation, while the company’s high profitability (discussed below) could support higher multiples.

A fair valuation is important for Affordable Growth stocks—it lowers risk while allowing investors to benefit from future earnings growth.

Profitability and Financial Health: A Stable Base

MNSO’s profitability (rated 8) and financial health (rated 7) add confidence:

• Strong Returns: The company has a Return on Invested Capital (ROIC) of 20.80%, well above its cost of capital, showing efficient resource use. Its Operating Margin (19.56%) and Profit Margin (15.40%) rank among the best in its industry.
• Healthy Balance Sheet: With a Debt-to-Equity ratio of 0.18 and a solid Current Ratio of 2.04, MNSO maintains good liquidity and low debt.

These factors are key for Affordable Growth investing—they ensure the company can maintain growth without taking on too much risk or diluting shares.

Conclusion

MINISO Group Holding Ltd. is a strong candidate for Affordable Growth investors, offering a mix of growth, fair valuation, and solid fundamentals. Its ability to generate high returns while keeping finances in order makes it a notable choice in the broadline retail sector.

For investors interested in similar opportunities, more results can be found using the Affordable Growth screen.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a financial advisor before making decisions.