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Authoritative Independent Monthly Share Selections Using Technical & Fundamental Analysis

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Primary Recommendation

Babcock International - Big opportunity in defence outsourcing

September 2005

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:
  • 178p
Under normal conditions, Babcock, a key supplier of mission critical defence projects and other support services to the Ministry of Defence (MoD), ought to trade on a PE in the high teens, as its markets are poised to benefit from a significant increase in outsourcing spending by the Government. But the shares have languished until recently because of fears that revenues from an important division were about to fall off a cliff. However, these fears have proved well wide of the mark following the release of a cracking set of final results which mark Babcock’s third straight year of profit growth. And with Babcock currently bidding for £12 billion worth of new contracts, it’s hardly surprising that the shares have recove ...

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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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