Railway, bus and coach transportation operators First group (London Stock Exchange: FGP) It was stated a month ago that bus passenger traffic has reached 65% of pre-pandemic levels.Moreover, at the time, the directors expected further Capacity recovery Fall semester as school and university “In full swing.”
Expect strong earnings recovery
At the same time, City analysts expect a strong recovery in earnings this year through March 2022. They expect a substantial increase in the next year, worth about 170%. If the business meets these expectations, revenue will exceed 2019 levels.
As the stock price is close to 91 pence, the forward-looking earnings multiple for the trading year ending in March 2023 is slightly higher than 12. In my opinion, this is a reasonable valuation. However, there is a considerable amount of debt on the balance sheet, which may be problematic if we see another recession.
But there are few signs that the weak economy will affect manufacturers of laser-guided concrete leveling equipment Semiro Corporation (London Stock Exchange: SOM). In September, the company delivered an impressive Half-year performance report Revenues, cash flow and profits have all risen sharply.
Covid catching up
The directors believe that part of the reason for the progress is that customers caught up with projects that were delayed due to the pandemic. Looking ahead, Somero also expects a strong performance in the second half of the year.In addition, CEO Jack Cooney stated that the company is manufacturing “In the next few years, a strategic investment to achieve healthy profits and cash flow…“
At the same time, shareholders’ interim dividends increased by 125%. The company also participated in a plan to buy back some of its shares. But despite the progress, the valuation does not seem high to me. With the stock price close to 500p, the forward-looking earnings multiple in 2022 is close to 12. The expected dividend yield is approximately 5.5%.
After the normalization of customer workflow, transactions in the next few years may be eased. But Somero has been expanding its business for many years, and this trend seems to continue.
Invest in corporate debt
Strong corporate transactions are good for Blackstone loan financing (London Stock Exchange: BGLF)The company aims to invest directly in high-level secured loans and bonds with floating interest rates, usually on behalf of the debt borne by the company and other organizations.It also indirectly invests in this type of debt through mortgage obligation (CLO) securities and loan warehouse investments — CLO is a single security backed by a debt pool. The process of collecting assets into securities is called securitization.
In the semi-annual report in September, the directors stated that they had reduced “Actual and expected investment downgrades and default expectations. ” This has brought positive performance to the business. But looking ahead, the company is cautious about how the pandemic will develop.However, the outlook for the rest of 2021 is “optimistic”.
This has obvious risks. That’s because the company faces the possibility of other companies defaulting on debt. However, I think valuation helps compensate for this higher risk. Of course, the default value is not certain.
The stock price is close to 81 Euro cents, the asset-to-price ratio is close to 0.9, and the shareholder dividend yield is close to 9%.
Kevin Goldbold There is no position in any of the above-mentioned shares. Motley Fool UK has recommended Somero Enterprises, Inc. The views of the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we made in subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that taking into account a variety of different insights, We are better investors.