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They also had a Renewal rate of 93% in 2021, including contracts with Ministry of Justice, two European telecoms clients and major UK financial services institution, which bears well for further high level renewals this year

Not sure when new contracts will be announced as they can take time, could be in weeks, could be in months but Capita have identified a £9.4bn Unweighted 2022 Pipeline. Obviously they won’t win all the opportunities they have identified.

The pipeline of projects identified includes:

BBC TV Licencing Won
Utilities sector H1
Technology business H1
H1 NHS England
H1 Financial Services
H1 Financial Services
H2 DWP H2 NHS Scotland H2

Serco end of 21 revenues £4.4 billion v ours circa £3.2 billion - yes there’s was higher but so what. Our revenues and profits are growing. They don’t justify a p/e of over 6 to our p/e of under 2. Capita sp imo is depressed and will bounce back to a more normal p/e of 6 - which would give a sp above Barclay’s target of 60p. That’s my thoughts anyway.

As an aside I would argue the sell off in US tech stocks is because many rose 200 / 300 % with p/e of over 100 in many cases. That was never sustainable and was dropping, high inflation and interest rates have added momentum to those drops. Capita on the other hand has a depressed sp and should, imo, do very well from these levels

I’ve not ignored those things - they are exactly the reasons Capita is such a STRONG BUY - atb

So Serco turnover is higher than ours currently, but not loads higher, their P/E ratio is 6.15 and ours is below 2. I think they are a great example to prove how depressed the sp actually is here. For us to have a more normal p/e of 6 then the sp would be around 70p - funny enough a bit over Barclay’s target of 60p

Barclay’s issued the OVERWEIGHT rating in March 22 - so very recently

Capita has stated it expects to be in a position to eliminate all debt next year (if it wants to) and it does have a high degree of protection against inflation. Long term, renewable government contracts also give its future cash flow great visibility. Barclay’s have given the company an OVERWEIGHT rating and share price target of 60p - I’m very happy with holding here

Barclay’s view of Capita, in the current environment, and having viewed the turnaround is an OVERWEIGHT rating. They did reduce their current price target to 60p, but I can live with that, for now.

Noting your fears of both UK and US stocks given the environment you describe- it makes it all the more important to find companies that have depressed share prices due to temporary reasons (due to carrying out company transformation say), low debt, secure government contracts, inflation clauses that manage contracts that are likely to continue to be required. That’s where you should be putting your investment imo.

Do you know any companies that fit that description by any chance

Capita - as an example

The bit at the bottom stands out for me. Whilst the company recognise the painful, but necessary transformation into a debt free, growing company has left the share price near rock bottom- now the transformation is completed the recognition is they need to now focus on share price recovery:

They (us the shareholders) now need to experience the benefits of the company’s completed transformation. (Big share price rises)

Capita’s own review of the last few years (see below) recognises the pain the company has gone through to streamline, reduce debt, become debt free next year and to begin to regrow revenues and profits in a predictable and sustainable way - no matter what the economic back drop is. No debt and inflation clauses will make balance sheets attractive at a time lots of other companies are struggling which in turn will suck investment in as IIs look for safe hands. This all imo means we will start to see all these rewards feeding through to the share price.

The fundamentals needed to build a successful company are in place – strong service delivery, a stronger balance sheet, and a simpler, more efficient and stable structure. We have addressed the major financial and operational debt that the business faced. The business is now more predictable, and operates with the values and behaviours that align with Capita’s purpose.

The effort and investment required to achieve all this should not be underestimated, but it has been essential to create a business that has a future and that people want to work for and with. Despite the progress made to improve so many aspects of the business, the year was disappointing for our shareholders who have been patient and supportive, attributes which we do not take for granted. They now need to experience the benefits of the company’s completed transformation.

I don’t think you can really compare an undervalued uk stock, with inflation clauses and secure government contracts to US stocks, particularly technology stocks, that are falling off the back of huge rises and which are adversely impacted by inflation. I would get less sleep personally being out of a stock that looks primed to rise following large falls and is now showing signs of growth after painful restructuring and is due to be debt free next year and restart dividends. Just my thoughts.

Exactly. Anyone getting too excited about a few pence rise and fall is completely missing the bigger picture that has commenced playing out here. 100% profit to 50p and for me that’s only the start.

The recent rise for me shows Capita share price is ready to start moving up again. It rose very quickly, but fell back some on profit taking. But those that sold will want back in again for the journey ahead. No point being happy with a few pence rise and fall with much bigger prizes here to aim for.As the company pointed out, this was a year of significant change at Capita. They consider they have now completed their transformation and established a strong platform for growth. They grew revenues in 2021, reversing six years of declines, and expect this trend to continue to improve. They also expect to deliver positive sustainable free cash flow in 2022. On top of this they believe following further disposals they can be debt free next year and will look at restarting dividends. For me all the above adds up to what is clearly an undervalued company with a renewed and exciting journey ahead. Imo this should easily reach and pass a 50p share price, I think it will also go back into £1’s but that’s obviously further down the line.This is just the start of the turnaround- buckle up !

Nothing has changed here for me. The company is still reducing debt, securing contracts and improving profitability. I can still see a clear route to 50p first target. I’m in this long term so runs up and pull backs will be a part of that journey I guess. But it can go up as fast as it can go down- but imo overall direction of travel is upwards

I agree, it’s a pull back off the back of a bigger rise. All quite normal. This will soon be over 30p imo and today will be forgotten. Great opportunity for a top up mind you.

Yes I’ve been watching the US drop today, although they had a big rise yesterday. They are more sensitive to inflation than us as we have clauses to pass on rises, one of the things I really like about Capita. I was also reading an article before on those that buy the drop rather than buying into rises, and historically how much more money is made using that tactic. I topped up earlier. Atb.

We also know this is just as capable to jump 6 or 7 % in a day.

We all know nothing moves in a straight line (unfortunately) and whilst I’d rather this went up every day, pullbacks happen. The turnaround and journey up towards my first target of 50p imo remain intact and in motion. Todays drop allows new investors who are now aware of Capita to join, some of us to top up and some who have already profited to exit. All normal, all healthy. This remains a long term hold for me. Gla.