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Sunday share tips: Revolution Bars, K3 Capital

Sun 19 December 2021 12:35 | 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) - Revolution Bars is worth a punt, a small one, admittedly, the Sunday Times's Jim Armitage told readers, and even then it is a very high risk punt.

In essence, one would be taking a punt on the return to normality being quicker than feared, with everyone "revenge partying" once it does come.

Key to Armitage's thinking, Revolution's venues cater mostly to the twentysomething crowd, the most likely cohort to indulge in revelry after weeks of being cooped up.

The company's shares were trading at their lowest since last January and its valuation multiples were at half their level last May.

Furthermore, with £4.6m cash on hand as of November, it was in a better position than rivals to weather a storm.

Fewer rival nightclubs and bars competing for its customers might also spur an even bigger bounceback than when restrictions were fully ended in July, Armitage said.

"If you are really optimistic, you can believe that there will be no club and bar closures, and that youngsters who cancelled their Christmas parties for fear of infecting granny on the 25th will have a wild week before New Year.

"Unlikely, I grant you, but at this price it is worth a flutter. Have a shot."

The Financial Mail on Sunday's Midas column recommended readers 'buy' shares of K3 Capital, predicting that they would increase "materially" in value over the next few years.

The adviser to small and medium-sized enterprises is growing at a blistering pace, having sold 167 businesses during the first half and with another 250 transactions expected to close over the full year, putting it far ahead of peers in terms in terms of deals volume.

K3 Capital's database covered nearly half of the roughly 4.0m SMEs in the UK and the firm actively pitched possible deals to these companies, while keeping them abreast of consolidation in their locality or sector.

It also offered tax advice, insolvency and corporate restructuring services.

Analysts anticipate more than 20% growth in annual turnover to £57m for the year ending in May 2022, for a 30% increase in profit to £17.7m, and even stronger growth in 2023.

The company has also guided towards a jump in its dividend payout from 9.1p per share in 2021 to 15.5p in 2023.

Worth noting, K3's chief executive officer, John Rigby, has his sights set on a £1.0bn valuation for the company, versus about £256m at last count.

"At £3.50, the shares are a buy - and the dividend provides an attractive 3.5 per cent yield on top."

    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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