Online fast-fashion firm Sosander (LSE:SOS) had an excellent 2021. I believe 2022 could be even better. Here’s why I’m considering adding this penny stock’s shares to my portfolio now.
Meteoric rise
A lot has been written about the death of the high street shopping experience in recent years. Many established retailers have fallen by the wayside in recent times. The pandemic has exacerbated this and consumers find themselves clothes shopping online more than ever. The rise of online-only fast fashion firms has taken the world by storm. This has been supported by technology evolving rapidly too.
Sosander was established in 2016 and joined the FTSE AIM just a year later. It is a women’s fast fashion brand selling clothes and accessories for a multitude of occasions and day to day wear too. Impressively, it has lucrative partnerships with established firms such as Next and Marks and Spencer.
Last year was an impressive one for Sosander. The share price rose 82% in 2021 from 17p per share to current levels of 31p.
Why I like Sosander
My bullish stance towards Sosander stems from two main aspects. These are macroeconomic factors and internal company factors. I believe both of these could favour its growth trajectory and make it one of the most exciting penny stocks on the market for 2022 and beyond.
From a macroeconomic perspective, online fast-fashion is a booming market that will only continue to grow. The impact of the pandemic has been largely positive on a burgeoning industry. Many other online fashion firms have reported record customer numbers and sales. This new way of life could continue and the pandemic shows no signs of disappearing too. Firms like Sosander will benefit in my opinion.
From an internal company perspective, I like Sosander due to its company structure. It is a relatively small firm, which means a lot of insiders own stock. I am usually buoyed when insiders own significant amounts of stock. This tells me their interests are aligned as they want a return on investment on their own money and can make it happen by helping the company succeed. In addition to this, who better than insiders to know whether a firm is on an upward trajectory. I keep an eye out for insiders buying shares.
A positive trading update released today by Sosander for the three months ending 31 December made for excellent reading too. Revenue was up 122% compared to the same period last year. Active customers and average orders also increased compared to the same period last year.
Penny stocks have risks too
Sosander is a relatively small firm in a big industry. One concern is that it could get out muscled by larger, more established competition. Secondly, when small companies try to grow rapidly, there are often growing pains. These can be such things as technological and infrastructure related so I must be wary of these issues. Both risks can impact performance and any return on my investment if I bought shares.
Overall I believe Sosander is heading for an excellent 2022 and beyond. It is an exciting penny stock that had a breakout year in 2021. I am buoyed by its progress to date including its excellent strategic partnerships as well as recent trading. Favourable market conditions should help too. I would add shares to my portfolio at current levels.
Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
