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; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consulant

    £20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250...

    Guru Careers: Financial Controller

    £45 - £55k DOE: Guru Careers: A Financial Controller is required to join a suc...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £12500 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Recruitment Genius: Sales Adviser - OTE £24,500

    £22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

    Day In a Page

    Mullah Omar, creator of the Taliban, is dead... for the fourth time

    Mullah Omar, creator of the Taliban, is dead... again

    I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
    Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

    Margaret Attwood on climate change

    The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
    New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

    New Dr Seuss manuscript discovered

    What Pet Should I Get? goes on sale this week
    Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

    The cartoon hedgehog leading the way into a whole new reality

    Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
    Ants have unique ability to switch between individual and collective action, says study

    Secrets of ants' teamwork revealed

    The insects have an almost unique ability to switch between individual and collective action
    Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

    Donovan marks his 50th year in folk

    The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
    Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

    Simulator recreates thrill of F1 circuit

    Rory Buckeridge gets behind the wheel and explains how it works
    Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

    Twitter accused of 'Facebookisation'

    Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
    Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

    Jane Birkin asks Hermès to rename bag

    The star was shocked by a Peta investigation into the exotic skins trade
    10 best waterproof mascaras

    Whatever the weather: 10 best waterproof mascaras

    We found lash-enhancing beauties that won’t budge no matter what you throw at them
    Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

    Diego Costa: I go to war. You come with me...

    Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
    Ashes 2015: England show the mettle to strike back hard in third Test

    England show the mettle to strike back hard in third Test

    The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
    Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

    Charley Hull: 'I know I'm a good golfer but I'm also just a person'

    British teen keeps her feet on ground ahead of Women's Open
    Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

    Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

    Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
    Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

    Our choice is years of Tory rule under Corbyn or a return to a Labour government

    Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'