MIDAS SHARE TIPS UPDATE: Begbies Traynor is an insolvency specialist to benefit from gloom and doom
Begbies Traynor is an insolvency specialist that should benefit from the gloom and doom, similar to our Midas share tip, FRP.
Focused on small and mid-sized companies, the group was founded in 1989 by Ric Traynor, who remains at the helm.
Midas recommended it last September, when Begbies Traynor shares were 74p. They sank to 61p in March, as financial markets tanked across the globe. But they have since rebounded, closing at £1.05 last week.
There should be further growth. Begbies publishes regular research into struggling companies and its latest 'Red Flag Alert' – for the three months to March 31 – showed that 509,000 British firms were in significant distress, the highest quarterly figure ever.
This number is widely expected to rise substantially through the year, and many firms will turn to Begbies for help.
The group runs a property business that helps firms to raise cash by selling assets, but it also provides other services, such as consultancy and transport planning. This division has generated a third of Begbies' profits in recent years.
Looking ahead, that may change. Sales of property, machinery and other fixed assets are likely to rise in the coming months, but advisory work may drop off.
Gains from the insolvency arm should more than outweigh any slowdown on the consultancy side. Begbies is set to release a trading statement this week and brokers expect a positive update.
Even before it became clear that the UK was plunging into recession, analysts were forecasting a 30 per cent increase in profit to £9.2 million for the year to April 30, 2020, rising to £10.5 million for the year to April 2021.
Begbies may beat those expectations and the group pays a decent dividend – with 2.8p forecast for the year just ended and 3p for the current 12-month period.
Midas verdict: Begbies shares have soared by 42 per cent in little over seven months, bolstered by growing fears about the economy.
The company is trying hard to be a good corporate citizen, offering online and phone advice to struggling firms. Nonetheless, it is likely to see business boom as companies fall by the wayside.
Shareholders have done well out of Begbies so far, but they should keep hold of their stock. At £1.05, the price ought to continue to rise.
Traded on: AIM Ticker: BEG Contact: begbies-traynorgroup.com or 0161 837 1700
Most watched Money videos
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- Blue Whale fund manager on the best of the Magnificent 7
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Land Rover unveil newest all-electric Range Rover SUV
- MailOnline asks Lexie Limitless 5 quick fire EV road trip questions
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Mail Online takes a tour of Gatwick's modern EV charging station
- Mercedes has finally unveiled its new electric G-Class
- Leapmotor T03 is set to become Britain's cheapest EV from 2025
- Mini Cooper SE: The British icon gets an all-electric makeover
- How to invest for income and growth: SAINTS' James Dow
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Young drivers can't afford to insure their cars: Number...
- SMALL CAP MOVERS: The stars are aligning for Phoenix...
- As Anglo American fights back in bid war, 1,100 jobs at...
- SHARE OF THE WEEK: Investors hoping Marks & Spencer can...
- I'm a wealthy aristocrat and we're all ruthless...
- Royal Mail expected to post losses of almost £1m a day as...
- FTSE 250 frenzy: Experts say these stocks can help Brits...
- ALEX BRUMMER: End this Czech farce at Royal Mail now
- RAY MASSEY: My four top tips when buying a second-hand car
- Thames Water is worthless: That's the verdict of its...
- GSK completes sale of Haleon shares having raised £3.9bn...
- Land Securities losses narrow but interest rate cuts...
- Cartier owner Richemont is latest luxury goods group to...
- The mystery of the stolen Nectar Points - and the loyalty...
- INVESTING EXPLAINED: What you need to know about pandemic...
- Typical energy bill set to fall by £116 in July, latest...
- MARKET REPORT: China's Ping An insists it is not bailing...
- Tesla's chairman dismisses as 'c**p' claims she is too...