Investment: Stagecoach's run has not been derailed yet
Friday 09 October 1998
They have firmed up recently, closing up 39p at 1,130p yesterday, after the group cleared a key regulatory hurdle in its purchase of 49 per cent of Richard Branson's Virgin Rail. The placing of stock worth about pounds 38m to finance the pounds 146m deal was also well received.
However, the rebound is unlikely to silence the Stagecoach bears. They warn that, with a large chunk of the UK bus market, a rail franchise and a train leasing company, Stagecoach is running out of options for expansion. This will force Brian Souter, the company's resourceful chairman, into risky ventures to keep the earnings momentum going.
The sceptics say the punt on Virgin Rail, with its appalling performance record, and the recent purchase of a stake in a company running toll roads in China, are perfect examples of this daredevil approach.
But the argument that Mr Souter is going to get it wrong sooner or later largely misses the point. This is not a steady-as-she-goes transport company such as National Express or First Group.
Stagecoach is more like an investment fund with a transport bias. High- risk, high-growth investments are part and parcel of its strategy, as its past record shows.
As such, Stagecoach will have plenty of opportunities to expand. Regional airports (Stagecoach already runs Prestwick), a US train company or even a low-cost airline - rumours point to easyJet - all fall into this category.
The shares are now on around 18 times 1999 earnings forecasts of around pounds 210m. This is a 15 per cent premium to the market, but a discount to its rivals. Stagecoach remains a good long-term punt.
- 2 Mystery man who gave mum heart-warming note on train 'wanted to put a smile on her face'
- 5 Amal Clooney gives excellent answer to fashion question at European Court of Human Rights
Mystery man who gave mum heart-warming note on train 'wanted to put a smile on her face'
Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
Mafia's wall of silence broken: Victim of Cosa Nostra's extortion rackets in its Corleone heartland co-operates with authorities for the first time ever
Amal Clooney gives excellent answer to fashion question at European Court of Human Rights
Sir David Attenborough interview: The one question about life that still baffles him
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
Louise Mensch says 'F**K YOU' in explosive tweets about David Cameron, Saudi Embassy and the Queen over King Abdullah tributes
iJobs Money & Business
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...
£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...