Further to go?27 Mar 2007 10:54
Stagecoach
Shares: 178.75p +0.75
Questor says Hold
Imagine: only five years ago, people were talking about bus and rail group Stagecoach going bust.
Founder Brian Souter had paid £1.2bn for Coach USA, a mish-mash of touring and charter buses, taxis and other stuff he didn't even realise was under the bonnet.
The financial wreckage it caused left the shares bumping around at 10p and few were prepared to bet that Mr Souter, who switched from chairman to chief executive to sort out the mess, could pull off a financial handbrake turn.
Mr Souter knew better, even topping up his stake to today's 14.2pc, as he set about selling off Coach in bits and then turning the same focus to the rest of the group, including getting shot of New Zealand buses.
As he concentrated on cash-generative UK buses and clever bids for rail franchises - notably South West Trains - the shares began their four-year climb.
Now Stagecoach can give back £700m to investors without leaving the group dramatically over-geared. Debt will be a manageable three times underlying earnings and the business is humming.
On a multiple of 17 times, Stagecoach shares are no longer cheap, but that falls to 15 times in 2008. With a yield of 2.3pc, stay aboard.