Time to get off the buses

In the brave new world post-privatisation, bus companies have become slick, lean, well managed affairs, writes Richard Phillips. Heading them is Stagecoach, run by the aggressive Brian Souter and his sister Anne Gloag.

Worth pounds 1.6bn, Stagecoach is a remarkable story. In the past year or so it has bought South West Trains under the rail privatisation programme, and has expanded abroad with operations in Africa, Sweden and New Zealand.

Shareholders who bought in at the flotation in 1993 have seen the value of their investment grow six-fold, outstripping the market by 500 per cent.

But at the same time the market has cooled. While Footsie has enjoyed one of its strongest bull runs, Stagecoach has become a slowcoach, underperforming by almost 6 per cent.

The company's beauty has been its ability to issue extremely highly rated paper to fund acquisitions of lower-rated companies. This has always been a way to a quick earnings boost. Mr Souter is convinced Stagecoach can continue on this road, although such companies often come a cropper. On balance it is time to take profits. Sell.