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I've been holding Stagecoach since 40p. My take is they don't just have lucrative state contracts, which pay, irrespective of passenger count, they are pushing ahead with a net zero emission goal. These factors and their strong liquidity (£875m as of June this year) give it a strong position to negotiate with National Express. National Express know this, too and have set about their own vision for ESG (Environmental-Social-Governance) score so why not bring Stagecoach's contracts including school bus routes into their operations.
Agree with the others stating National Express was 320p+ so so once they return to this price, we should Stagecoach back to 115p+ It's not if, it's just a matter of when.
Should be back over £1 shortly.
How are you calculating cheap? Based on what they were worth pre pandemic?
Are the shares still cheap at 80 p ?
Are the shares still cheap at 80 p ?
Yes if you're holding both as you already knew you wanted exposure to markets outside of UK
It's the theory why Prudential split in two they realised either investors wanted
- high growth asia
- slow and steady UK (divi yield)
There weren't many who wanted a mix of both
Split it apart and the two bits were worth more as investors who previously sat on the sidelines bought the part they wanted
This is just reverse ie a combined scale will outweight investors who might want a pureplay story (stagecoach investors). NX investors already know they get a mix (but obvs the mix moves more to UK than previous)
but if you're already holding both, is that theory less relevant?
Ok some seem to think no so I'll explain why answer is in fact "yes"
Atm you hold just shares in stagecoach. Stagecoach is a pure play UK bus operator. NX (not a business I know too well) makes a lot of it's cash in USA
So if you think "I want to bet on the UK recovery but not so sure about the USA market" then as things stand stagecoach is a great investment for you
But after the deal it's no. As post deal 75% of your holding is tied to a business which earns a chunk of cash in USA (and other places)
The thesis of what you're investing in has changed