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Sunday share tips: Future, Greensleeves

Sun 29 November 2020 18:32 | 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 Sunday Telegraph's Questor team labelled Future shares a 'speculative buy' following news of its takeover approach for GoCo.

To back up its case, citing one fund manager, Questor pointed to the magazine publisher's track record on acquisitions and its demonstrated ability to squeeze profits from them, including from the assets belonging to rival publisher Centaur.

Other managers pointed out how repeated buyouts made interpreting financial results harder.

Nevertheless, Future's sales for the year to September were ahead by 53%, its profits before tax by 309% and its case from operations by 71%.

Yet its shares in issue had grown by a relatively modest 16%, so that even if net debt had jumped 54%, Future wasn't simply throwing capital at those returns.

"Strong cash generation is eating away at these debts. Even when we take that extra capital into account, Future's growth is impressive," said Questor.

"A good business, then. But a good investment? The shares trade at about 22 times earnings - reasonable for such high growth. But a lot depends on this latest acquisition. A risky buy."

The Mail on Sunday's Midas column recommended readers pick up bonds sold by Greensleeves, the charity that runs homes for the elderly.

It was originally set up by the Women's Royal Voluntary Service, which itself was created just before the Second World War and whose patron, Princess Elizabeth, would go on to become the future Queen.

The group now runs 25 homes with 1,000 residents and nearly 90% of them are rated as good or outstanding by the Care and Quality Commission.

Chief executive Paul Newman is seeking to raise as much as £25m via a 10-year charity retail bond paying 5% annually.

The minimum subscription is £500 and interest will be paid twice a year, with a first payment due next June.

They will also be listed on the Stock Exchange, allowing investors to buy and sell them much the same as they do shares.

"Unlike many care home groups, Greensleeves is a charity so all the money it makes is ploughed back into the business to expand and improve services for residents," Midas pointed out.

Yet Greensleeves has achieved steady growth in revenues and profits over recent years and predictions are that it will continue to do so.

"The bond issues will allow it to offer decent care to more people and the interest rate is extremely attractive in today's market," Midas judged.

"Bonds are available through most leading stockbrokers. They are a 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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