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4 shares the pros are buying

Our regular roundup of trades by professional investors, featuring Mitie, Focusrite, Gulf Marine Services and Rightmove.

by Selin Bucak, David Campbell on May 08, 2018 at 05:00

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Key stats
Market capitalisation£693m
No. of shares out366m
No. of shares floating338m
No. of common shareholdersnot stated
No. of employees52798
Trading volume (10 day avg.)1m
Turnover£2,126m
Profit before tax£31m
Earnings per share-14.70p
Cashflow per share-3.68p
Cash per share35.71p

Mitie (MTO)

Who’s trading? Citywire A-rated Joel Tillinghast

The trade: The manager of the massive US-based $38 billion (£28 billion) Fidelity Low Priced Stock fund upped his stake in outsourcer Mitie from 5.1% to 5.3% worth £35.5 million at a price of 188p.

How have the shares performed? Mitie has dropped from a high of 345p hit in 2014, although they have bounced from March’s 13-year low of 157p.

What does the company say? After reporting a statutory loss last year and upping the expected costs of its restructuring from £24 million to £35 million, Mitie in March noted that the collapse of former rival Carillion had raised ‘fundamental questions’ about how the sector delivers its services.

What’s the outlook? Analysts appear to believe all the bad news and more has been baked into the stock, with a steady upgrading from universal negativity a year ago. That has not yet translated into outright enthusiasm however, with an even spread of opinion and a measured 208p price target.

Key stats
Market capitalisation£282m
No. of shares out58m
No. of shares floating30m
No. of common shareholdersnot stated
No. of employees183
Trading volume (10 day avg.)m
Turnover£66m
Profit before tax£13m
Earnings per share14.80p
Cashflow per share21.10p
Cash per share24.41p

Focusrite (TUNE)

Who’s trading? Citywire AAA-rated Julian Fosh and Anthony Cross

The trade: Liontrust’s Fosh and Cross have upped their holding in audio equipment manufacturer Focusrite from a previously undisclosed amount to 5.2% of the shares worth £14.3 million at a share price of 472p.

How have the shares performed? Focusrite’s shares almost doubled over one year, seeing a significant uptick in March especially following a strong trading update. At 488p its shares are 113% higher than its 52-week low of 229p.

What does the company say? The business’s half-year result showed a 21% rise in revenue to £38.8 million, while pre-tax profit was up by 26.8% to £5.8 million. It had a particularly strong sales period over the Christmas period and grew sales in the US, UK and Europe.

What’s the outlook? Analysts at Edison Investment Research upgraded their profit forecast for 2019 by 3.5%. ‘The missing element is excess cash, where the market appears to be discounting investment of the net cash balance at a c.15% return,’ they said.

Key stats
Market capitalisation£136m
No. of shares out350m
No. of shares floating197m
No. of common shareholdersnot stated
No. of employees490
Trading volume (10 day avg.)1m
Turnover83m USD
Profit before tax43m USD
Earnings per share-0.04 USD
Cashflow per share0.03 USD
Cash per share0.08 USD

Gulf Marine Services (GMS)

Who’s trading? Citywire A-rated Steve Johnson

The trade: The chief investment officer of Aussie fund house Forager upped his stake in offshore specialist Gulf Marine Services from 2.7% of shares to 3.4% worth £4.7 million at a price of 38.6p.

How have the shares performed? The business lost almost 75% in value between listing in 2014 and a near-record low of 32p in April. News of a major contract win has lifted the stock off the floor, however.

What does the company say? ‘We are seeing increasing levels of enquiries and tender activity in our markets,’ said chief executive Duncan Anderson last month. That is from a low base however, after adjusted profit plummeted from $50.7 million (£37 million) in 2016 to just $4.8 million last year.

What’s the outlook? Following a long slump from 2014, benchmark oil prices have soared to a four year high of $73 in the last week, fundamentally changing the profitability of the company’s energy exploration and extraction markets. Investec reiterated its ‘buy’ guidance in March on a target price of 65p.

Key stats
Market capitalisation£4,130m
No. of shares out91m
No. of shares floating90m
No. of common shareholdersnot stated
No. of employees479
Trading volume (10 day avg.)m
Turnover£243m
Profit before tax£180m
Earnings per share155.15p
Cashflow per share157.07p
Cash per share27.33p

Rightmove (RMV)

Who’s trading? Citywire AAA-rated Todd Beiley and John Christensen

The trade: The managers of the $3 billion Kar Small-Cap Growth fund lifted their stake in property listing site Rightmove from 3.3% to 3.9% worth £162 million at a share price of £45.49.

How have the shares performed? Rightmove has more than doubled in value since early 2015 and set a fresh record high last week, even as other property stocks have slid on weaker home sales.

What does the company say? Hosting City analysts last week, Rightmove noted that 45% of independent estate agents in the UK spent more than £1,000 on its services every month. Pre-tax profits at the company climbed 10% last year to £178 million on revenue up 11% at £243 million.

What’s the outlook? Analysts have turned cautious on the stock as its shares have continued to soar over the last year, holding it on a negative rating by a ratio of five-to-one, on an average price target of £43.59. That’s 5% below where it currently trades, on a value of almost 30 times 2017 earnings.

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  • Mitie Group PLC (MTO.L)
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  • Focusrite PLC (TUNE.L)
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  • Gulf Marine Services PLC (GMS.L)
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  • Rightmove PLC (RMV.L)
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