MIDAS SHARE TIPS UPDATE: Shares in airport cafe firm SSP Group take off – even when planes don’t
The British Airways computer glitch last week was horrendous for thousands of passengers – leaving them stranded, delayed and fuming.
But theirs was not a one-off experience. Going abroad in July and August can be nightmarish, typified by overcrowded airports, fractious families and unexplained delays.
Frustrated travellers invariably seek solace in airport bars, cafes and restaurants, many of which are run by SSP Group.
Travel hospitality: SSP Group runs many airport cafes, bars and restaurants - recommended by Midas in 2015
Midas recommended SSP in October 2015 at £2.98. Today, the stock is £7.07 and shareholders have enjoyed robust dividend growth and two special payouts, as well.
SSP brands range from Upper Crust and Ritazza to more glitzy establishments such as the Five Borough Food Hall at New York’s John F Kennedy airport and the Norgesglasset Bar in Oslo.
SSP also operates airport outlets on behalf of chains such as Pret A Manger Starbucks and McDonald’s.
The company runs about 2,500 outlets in total, a third of which are in the UK, with most of the rest in mainland Europe and America.
A trading statement last month said that turnover for April, May and June this year was more than 9 per cent up on the same quarter last year, boosted by new contracts in Europe and North America.
Issues such as the grounding of the Boeing 737 Max aircraft affected sales in some US airports, while slower growth in China also had an impact on the firm.
Nonetheless, brokers expect an 8 per cent increase in sales to £2.77billion for the year to September 30, 2019, with profits up 11 per cent to £205million and a 12 per cent hike in the dividend to 11.4p.
Midas verdict: Air travel has been growing, airports are more congested and passengers are increasingly looking for distraction before they fly.
This trend is likely to continue, and SSP should benefit, even if adverse economic conditions affect passenger numbers in the short term.
Shareholders who have held the stock since 2015 could sell some shares and bank the profit. But they should keep at least half as a long-term investment.
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