Derek Pain: Heavyweights could benefit by attracting new investors

Should Whitbread indulge in a little cosmetic surgery – of the corporate variety? I ask this as the shares of the leisure group approach a new peak of 4,000p, and such a heavyweight figure is thought to be something of an impediment when it comes to attracting new investors.

I am not suggesting that City institutions balk at such a high price, but many small players, investing modest amounts, can easily be deterred. Of course fancy priced shares, in strict investor parlance, are no different from an array of much lower valued shares totting up to about the same outlay. However, a shareholder gets many more shares for roughly the same cost and possibly a feeling of better value.

Whitbread, one of the stars of the No Pain, No Gain portfolio, could, in the long term, make itself even more attractive to many if it issued more shares through splitting its existing units, or handing around free shares. Initially, it would make no difference to its stock market capitalisation. For example, a ten for one bonus could bring the price down to, say, nearer 400p. Such action could prompt a degree of small selling as some shareholders decided to take advantage of the lower level and unload some of their stake, but any residue would soon be mopped up.

With its growing Premier Inn budget hotels chain and its booming Costa Coffee division, plus pubs/restaurants, Whitbread has much going for it. It seems well placed to benefit from the country's economic revival and peak profits will almost certainly be achieved in its current year. I am hopeful of even more progress in the next few years.

Mind you, Whitbread is not the only company to feature an upmarket share price. ASOS, the online clothing retailer that in the portfolio's early days I regarded as too expensive at 30p, has hit 7,000p on the junior AIM market. And among the top 100 shares Next is above 6,000p, Reckitt Benckiser is comfortably over 4,000p and there are quite a few stocks near Whitbread's territory.

Another method Whitbread could adopt is to hive off the Costa side. Apart from a stock market floatation or sale, with at least some of the proceeds going to shareholders, it could also hand Costa shares to its own investment army. There have been recurring rumours that the bubbling coffee pot could be poured, but the general feeling is that any possible deal is some years ahead.

Although moves to reduce prices often occur, there is also a tendency to "inflate" share values through consolidations. Findel, a portfolio constituent, adopted such a policy last year and as a result enjoyed a sudden price above 100p instead of a single digit. And taxpayer controlled Royal Bank of Scotland also indulged in such an exercise.

Lloyds Banking, a constituent since last summer, also has a significant taxpayer involvement. The shares have been firm on talk that the Government will again reduce its stake in the coming months, after the success of last year's exercise. There's also another, more intriguing, suggestion.

A growing body of opinion believes the bank, which ran into difficulty when former prime minister Gordon Brown said it should take over deeply troubled rival HBOS during the financial crisis, will in the not too distant future return to the dividend list.

The shares, once top FTSE performers, slumped to near 20p following the HBOS (Halifax/Bank of Scotland) acquisition. They have since clawed their way back to, at the time of writing, around the 84p mark. Obviously once the group is declaring dividends further progress should occur.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
News
Angelina Jolie with her father Jon Voight
people
News
Bill Kerr has died aged 92
people
Sport
footballPremiership preview: All the talking points ahead of this weekend's matches
Arts and Entertainment
Warner Bros released a mock-up of what the new Central Perk will look like
tv'Friends' cafe will be complete with Gunther and orange couch
News
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
people
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SAS Business Analyst - Credit Risk - Retail Banking

    £450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

    Project Manager - Pensions

    £32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

    KYC Analyst, Birmingham - £200-£250 p/d

    £200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

    Test Manager - Banking - Yorkshire - £450 per day

    £400 - £500 per day: Orgtel: Test Manager - Banking - West Yorkshire - £400-£5...

    Day In a Page

    Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

    The phoney war is over

    Russian troops and armour pour into Ukraine
    Potatoes could be off the menu as crop pests threaten UK

    Potatoes could be off the menu as crop pests threaten UK

    The world’s entire food system is under attack - and Britain is most at risk, according to a new study
    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
    From Mozart to Orson Welles: Creative geniuses who peaked too soon

    Creative geniuses who peaked too soon

    After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
    Caught in the crossfire of a cyber Cold War

    Caught in the crossfire of a cyber Cold War

    Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

    Salomé: A head for seduction

    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
    From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

    British Library celebrates all things Gothic

    Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
    The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

    Is the Hard Rock Café worth fighting for?

    The restaurant chain's owners are currently embroiled in a bitter legal dispute
    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

    In search of Caribbean soul food

    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
    11 best face powders

    11 best face powders

    Sweep away shiny skin with our pick of the best pressed and loose powder bases
    England vs Norway: Roy Hodgson's hands tied by exploding top flight

    Roy Hodgson's hands tied by exploding top flight

    Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
    Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

    Di Maria and Ronaldo: A tale of two Manchester United No 7s

    They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
    Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

    Robert Fisk: No victory for Israel despite weeks of devastation

    Palestinians have won: they are still in Gaza, and Hamas is still there
    Mary Beard writes character reference for Twitter troll who called her a 'slut'

    Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

    The Cambridge University classicist even wrote the student a character reference
    America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

    America’s new apartheid

    Prosperous white districts are choosing to break away from black cities and go it alone