Sunday share tips: Thomas Cook, Carpetright

13th Dec 2015 21:46

(ShareCast News) - Thomas Cook has come a long way from its near-death experience in 2011, after the company announced it would go cap in hand to its creditors, sending its share price spiralling lower.The stock lost three-quarters of its value on the day of the announcement.The company was also expulsed from the FTSE 100.Now it is in the FTSE 250 and the company´s latest full-year results revealed its first post-tax profit in five years.Since February 2014, the shares have come under pressure mainly as a result of the geopolitical tensions - and terrorism more recently - in various geographies which have taken their toll on some of its markets.Yet what truly matters is whether the economic recovery will be enough to entice its clients to splash out again on its tours. Analysts believe so, with the current market consensus being a buy, says Hargreaves Lansdown´s Richard Hunter in The Sunday Express. Carpetright´s new boss, Wilfred Thomas Walsh, is making progress turning the company around, but he still has his work cut out for him.Under its previous stewards, the company took a quarter of the flooring market but it had also become flabby, with dated stores, for example, which was duly reflected in the share price.The stock didn´t even manage to keep up with inflation, since 2009, even as the FTSE 350 general retailers index rocketed 150%.Since taking the helm 18 months ago, Walsh has begun to prune the number of stores and plans to continue, in a bid to lower rent costs which saps the company´s cash flows - alonsgide other successful initiatives.Last year, the company turned a profit of just £6.6m on sales of £470m.However, rebuilding the company´s margins back to its days of glory will take years. That makes the price-to-earnings ratio of 25 look rather heady. Interest rate rises, if they materialise, will also damp the housing market - and demand for flooring.Walsh is doing well, but there are better places to put your money. 'Sell', says the Sunday Times´s Danny Fortson.