UK Edition
Questor: Telecom Plus well placed to benefit from a Conservative crackdown on energy prices
The Conservative Party's proposed crackdown on energy providers may be worrying shareholders in SSE and Centrica but it would only serve to reaffirm the attractions of Telecom Plus's business model, assuming the Tories are re-elected and the policy brought in.
Even if this does not happen, the FTSE 250 multi-utility provider is already seeing a narrowing gap between standard variable energy tariffs and aggressive introductory deals, judging by its recent full-year trading update.
An acceleration of that trend could help Telecom Plus add to its 600,000 customers since it has a 20-year power supply deal with npower that is priced at a discount to the average standard variable tariff offered by the Big Six.
As a result Telecom Plus can offer competitive tariffs and also bundle services, as it provides broadband and telecoms as well as gas and electricity. A new home insurance offer could also help drive customer acquisition.
Although investment in IT and new customer additions may mean profits come in broadly flat for the year to March 2018, a 4.2pc dividend yield means investors will be paid to wait before a possible re-acceleration in earnings momentum in 2019.
I've tipped this company before and this appears still not to be priced in - Government intervention should boost it further.
Questor says: Buy
Ticker: TEP
Share price at close: 1250p
Aggreko
An embarrassing attempt by Aggreko to reward directors with shares for simply staying with the company for three years (albeit in exchange for capped bonuses and incentive schemes) was rightly pulled by the company after institutional investors did their job ahead of last week's AGM.
That allowed the market to focus on the FTSE 250 firm's operational performance, and the good news came in the form of no additional bad news after 2016's problems, when Aggreko extended a series of declines in annual profits.
Chief executive Chris Weston noted a 2pc like-for-like increase in sales, compared with the 10pc drop in 2016, and left guidance for a full-year drop in pre-tax, pre-exceptional profits unchanged.
A stabilisation, or improvement, in the top line will help the generator and equipment rental specialist in its efforts to drive group operating margins up from 16pc last year to its 20pc target.
If that 20pc goal is met, earnings per share could reach the 80p mark at least, with a little sales growth, leaving the stock on a forward price/earnings ratio of barely 11 times.
Questor says: Hold
Ticker: AGK
Share price at close: 887.5p
Connect
Last week's interims clearly did not enthuse everyone, as Connect's shares slipped, leaving us sitting on a loss on the book and newspaper distribution and parcel freight expert.
Management increased the interim dividend by 3pc. This means the 7.8pc prospective dividend yield should be enough to keep income-seekers happy, even if growth-hunters may prefer to wait for the next step in the company's strategic development.
The sale of the education and care operations is a huge step and the company is investing in new systems to improve efficiencies and capitalise on returns services deals with Amazon and French Connection.
Further signs of an upturn in book sales after years of decline would be an unexpected, if welcome, boost.
Questor says: Hold
Ticker: CNCT
Share price at close: 126p
Devro
As with Aggreko, the good news from Devro's first-quarter trading update in April was the absence of additional bad news. Our selection of the sausage skin maker back in January is now yielding a small capital gain.
There could be more to come, as the Devro 100 efficiency programme begins to drive costs down. Better still, a forward price/earnings ratio of just 13 times suggests the market remains sceptical.
This offers scope for an upside surprise, while a dividend yield of around 4.5pc means investors can afford to wait patiently.
Questor says: Hold
Ticker: DVO
Share price at close: 198.75p
Russ Mould is investment director at AJ Bell, the stockbroker