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High-yield Stobart is going places

A high yield and switch in focus to biomass supply and airport ownership means it is time for investors to reconsider Stobart.
November 27, 2014

Concerns of abrupt strategy changes have sent shares in Stobart Group (STOB) plummeting this year, but the decision to focus on biomass and airports looks set to produce rapid EPS growth in coming years and there is a 6.2 per cent dividend yield to enjoy in the meantime.

IC TIP: Buy at 97p
Tip style
Speculative
Risk rating
High
Timescale
Long Term
Bull points
  • Net debt reduced by 94 per cent to £8.1m
  • 6.2 per cent dividend yield
  • Fast growing businesses
  • Share price below net asset value
Bear points
  • Reputation for abruptly changing strategy
  • Dividend not covered by earnings in the short term

In April, Stobart sold a 51 per cent stake in its iconic haulage business, Eddie Stobart, for £281m and used the proceeds to fund a £34m share buyback and pay off £191m of loans, taking net debt to just £8.1m. Now, with a much healthier balance sheet, the group is focusing on its faster-growing air and biomass businesses.

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