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Sunday share tips: Escape Hunt, Learning Technologies

Sun 21 November 2021 18:51 | A A A

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No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(Sharecast News) - The Financial Mail on Sunday's Midas column told readers that shares of Escape Hunt were a 'buy', arguing that they should "move materially ahead" over the coming months and beyond.

The company was primarily a franchise business when it debuted on the stock market in 2017, designing games and escape rooms, but now operated its own sites, with 15 in the UK and another three overseas.

Each fully-owned property generated at least £150,000 annually, against about £40,000 from each franchised site.

Participants are locked in a room themed to look like a film or TV set, such as one from the Dr.Who series, and must work out how to escape.

Although the pandemic set the business back, its owners did not remain idle, launching virtual games while plotting their comeback - and now those plans were starting to deliver.

For starters, Escape Hunt had been able to secure premium sites from eager landlords.

It had also branched out into other areas with the acquisition of Boom Battle Bars, a fast-growing outfit that offered cocktails and bar food together with competitive games, like Bavarian battle-axe throwing.

Boom Battle had seven venues and 20 more were expected to open their doors over the next 12 months, alongside more Escape Hunt sites, which were expected to total 80 by the end of 2022.

The company, which had been loss-making thus far, was expected to move into the black in 2021 with profits of £1.2m, rising to £5.7m in 2022 and £9.4m during the following year.

"Escape Hunt has had a bumpy ride on the stock market but the group is now stronger, more established and about to become significantly bigger. At 33p, the shares are a buy."

The Sunday Times's Robert Watts tipped Learning Technologies to readers following the company's buyout of its much larger US rival GP Strategies.

Learning Technology's boss believed that the purchase of GP would be a catalyst for its international expansion. Yet the acquisition was but the company's latest, having taken over five other outfits over the course of 2020 and three more towards the start of 2021.

Its portfolio of services now included the ability to identify potential new recruits and the adequate pay levels, as well delivering inclusion programmes or induction courses via mobile, among others.

The company's shares had more than quadrupled over the past five years and its sales were ahead by 29% at the half-year stage reaching £82.6m.

Furthermore, while Learning Technologies had taken on $265m of debt to fund the purchase of GP Strategies, the company had a good track record when it came to deleveraging and turning businesses around.

"But LTG has a decent record of de-leveraging swiftly after deals and quickly making loss-making acquisitions profitable. And in Andrew Brode - perhaps better known for his tenure at the translation and business services group RWS - LTG has a wise and experienced chairman at the helm," Watts explained.

"The lower share price looks like a good opportunity to get involved. Buy."

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.

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