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Babcock International

July 2015

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:
  • 1126p
Our buy recommendation in February at 1008p looks well-timed as the shares have soared following the Conservative election victory, which means the Trident nuclear program, which underpins much of Babcock’s revenues, will continue.The company also put out solid and in line results with revenues, pretax profit and eps rising 27%, 43% and 10% respectively to £4.5bn, £418m and 68.5p. Excluding the £1.75bn Avincis acquisition, organic revenue growth was 12% while margins were unchanged. The order book has risen from £11.5bn to £20bn although the bid pipeline has decreased from £13bn to £10.5bn as Babcock missed out on one £3bn contract. The Avincis deal pushed up net debt from &poun ...

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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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