I think the Asos (LSE: ASC) share price is set to smash the FTSE 100 in 2021. It’s already off to a fantastic start. Even though the year is less than three weeks old, the stock has already nearly doubled the UK’s leading blue-chip index’s performance.
And over the past 12 months, the stock has outperformed the index by 77% excluding dividends. I think it might be too much to ask to see a similar performance in 2021. Nevertheless, I reckon it’s more likely than not the Asos share price will beat the FTSE 100 over the next 12 months.
Asos share price growth
The coronavirus pandemic has drastically changed the way consumers shop and interact with brands. The closure of all non-essential shops has forced consumers to shop online, effectively transferring all non-essential sales to the web.
I don’t think this will continue forever. When the pandemic ends, customers will still want to visit shops. Although I genuinely believe there will be a lower number of customers visiting bricks-and-mortar stores regularly from now on. This is one of the key reasons why I’m so optimistic about the outlook for the Asos share price.
It’s not just consumer habits that have changed. It’s businesses as well. Before the pandemic, the infrastructure required to process the millions of online orders placed every day just wasn’t up to scratch. However, over the past 12 months, businesses have been forced to adapt.
Delivery firms have hired tens of thousands of new staff to cope with demand, and Royal Mail has launched its first parcel-focused delivery and pick-up service. These actions have made it easier and more straightforward for customers to shop online, and I believe that’s excellent news for the Asos share price in the long run.
The company was one of the first to develop online fast fashion. It effectively pioneered the model so many other businesses use today. Unfortunately, the group has been beset by several headwinds over the past few years.
But these now look to be behind the business. As we advance, I think the combination of more shoppers placing orders online and better delivery infrastructure will help turbocharge the group’s growth. I believe these tailwinds will allow the business to live up to its full potential. That’s why I’m incredibly optimistic about the outlook for the share price in the new year.
The new normal
Unlike many other FTSE 100 companies, the enterprise is exceptionally well-positioned for the new normal. Asos’s business model has been built around the internet. It does not have to spend millions of pounds adapting to the new environment, because it’s already there. This advantage should allow the business to continue to take market share from struggling competitors.
What’s more, I think these advantages could lead a competitor to make an offer for Asos. It’s easier to buy technology than to build it, and some old-fashioned firms may decide to take this route as it would also give them access to the company’s global customer base.
For those reasons, my money’s on the share in 2021.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended ASOS. 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.