Sunday share tips: Stagecoach, Be Heard Group, GKN

4th Sep 2016 12:43

(ShareCast News) - Shares in Stagecoach are worth holding despite falling 38% over the last 12 months, said the Sunday Times' Inside the City column, which pondered whether much more of a fall could see founder Brian Souter take the business private again. There are a few possible reasons for the collapsing shape price, not least that three of the transport group's UK rail franchises are up for renewal in the next couple of years. It would be very impressive to retain all three, especially as the company's bid for the East Coast franchise has proved wildly over-played, which itself has also hit the shares.Virgin East Coast, where Stagecoach holds a 90% stake to Richard Branson's 10%, has seen revenues badly decouple from the company's overoptimistic 8-9% growth target. In its final results the company blamed "the effects of weakening consumer confidence, increased terrorism concerns, sustained lower fuel prices, the related effects of car and air competition, slower UK GDP growth and slowing growth in real earnings", which means it does not look likely that it will be able to pay the government the agreed £3.3bn of premiums over the course of the franchise, which should run until 31 March 2023. A clause will also apply whereby amounts are receivable by the franchise from the government if UK GDP is below certain pre-defined levels. GKN was felt to offer more value, the Inside the City column suggested, even though rumours of a Chinese bid are bit far-fetched. Instead GKN might be on the verge of its own deal in the People's Republic.Be Heard Group is a share that could go far, said Midas in the Mail on Sunday. Founded by former Aegis and Engine Group chief Peter Scott, Be Heard is a marketing agency focused exclusively on digital: web design, online advertising, search engine optimisation and user experience (UX). Scott has already acquired two businesses as part of a plan to make three to four acquisitions a year, building revenue up to £100m over the next four years.The industry data supports the idea that there is a huge amount of growth still to play for in the digital world. By 2020, online advertising is predicted to overtake TV advertising with a total spend of more than £185bn, as global online purchases more than double 2014's £1.1trn to more than £2.5trn. While some small agencies focus on one or two aspects of digital, Scott and a heavyweight board of directors aim for Be Heard to be all things digital to all clients and he has attracted some large institutiaonl investment as the company floated on AIM in May. Interim results later this month are forecast to show sales of £9.1m and profits of £700,000, rising to £13.2m and £1.5m respectively next year.Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only and not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.