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Babcock International - Gain to date:538%

December 2012

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • BAB
  • Price:
  • 957p
Shares in defence and engineering support services group Babcock, which we originally tipped at 178p in April '05 and again at 484p in June '09, have enjoyed a terrific run to the current 957p. A key catalyst has been the transformational £1.3bn acquisition of rival VT Group in March 2010, which added scale in defence support services as well as bringing in civil and “ critical infrastructure” contracts, encompassing the training, education, environment, emergency services and security sectors. Although the deal, which added nearly £1bn to sales, £4bn to the order book and created the opportunity to deliver cost savings of more than £50m, increased Babcock's net debt to £729m (net debt/EBI ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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