Yahoo Finance Cooling energy crisis provides a catalyst for this stock
This column’s decision to stick with price comparison and financial services platform Moneysupermarket.com in February seems to be paying off.
The full-year results drew little more than a yawn from the market, largely because the energy switching industry looked dormant, but the first signs of movement have appeared here, while analysts have begun to upgrade profits forecasts and the shares have started to head higher.
There could be more to come, and shareholders will also have the chance to bank the final dividend for 2022 of 8.61p a share on May 11 (if they were on the register on March 31).
Tuesday’s first-quarter trading update offers further grounds for encouragement. It backs our argument that Moneysupermarket.com’s services may prove more valuable than ever to customers, given the current environment of inflation, real-terms drops in wages and rising interest rates.
First-quarter sales grew by 15pc year on year, buoyed by a 63pc surge in its travel business, a 23pc advance in insurance and a 9pc increase for its money division as consumers shopped around, looked for the best deals and then snapped them up via the FTSE 250 company’s website.
Moneysupermarket.com is then paid a commission by the product providers. The laggard, yet again, was home services but even that grew 5pc. Better still, energy group Ovo launched a 12-month fixed energy tariff in March, and one that was set 9pc below the Government’s energy price cap.
Consumers may be wary of diving straight in for the first such offer in a while and Peter Duffy, chief executive at Moneysupermarket.com, still expects little activity in 2023, especially as he asserts the Ovo deal is not expected to be a material revenue generator.
Even so, it does offer the first signs of a return to life in the previously moribund energy switching market, and that could be the next catalyst for the stock, where a strong balance sheet and robust cash flow remain ongoing attractions.
Follow the money and keep hold of Moneysupermarket.com.
Questor says: hold
Ticker: MONY
Share price at close: 249.8p
Update: Burford Capital
A favourable ruling in a long-running legal case is boosting shares in litigation finance specialist Burford Capital and also reminding investors of the income on offer from the £100m bond that was issued in 2017 with a 6.125pc coupon and 2024 maturity date, first assessed in this column shortly after issue.
The ins and outs of the so-called Petersen case have given investors a wild ride in both the equity and the debt. The shares flew to a peak of £19.98 in 2018, only to plunge to 420p in 2020 and then rally again towards the £10 mark. The price of the £100m bond has ranged from £80 to £112 in its lifetime.
The latest surge in both is the result of the Southern District Court of New York ruling in favour of Burford’s clients, Petersen and Eton Park, and against the state of Argentina.
The court has stated Buenos Aires’ forced nationalisation of oil firm YPF in 2012 breached the terms of the company’s 1993 listing in Argentina and also New York. The plaintiffs have argued the takeover contradicted an agreement, which stated YPF would not be nationalised, or that the government would launch a tender offer in the event of such a move, which it did not do.
Burford Capital is now due for its share of any compensation, and potentially interest, thanks to the money it provided to fund the protracted legal action. Analysts have argued Burford could be due for a payout of anywhere between $3bn (£2.4bn) and $6bn for its share.
However, Argentina is likely to appeal. Further debate over the amount of compensation and interest that must be paid is also likely, and the country’s finances remain precarious, so nothing can be taken for granted, especially as Argentina’s sovereign bonds trade at big discounts to par value and the International Monetary Fund is offering advice and support to its government.
This column is not interested in taking sides. What matters for holders of the bond is that the Petersen decision is a further affirmation of Burford’s business model.
The company has a strong pipeline of funded additional cases and net assets of $1.6bn. The 6.125pc 2024 bond pays coupons semiannually, in April and October, and 11 such payments of £3.0625 per £100 bond are in the bag since our study nearly six year ago.
Four more are due before the bond matures and the principal is repaid on Oct 26 2024. In Questor’s view, the coupons should keep providing welcome income.
Questor says: hold
Ticker: BUR
Share price at close: £10.18
Read the latest Questor column on telegraph.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 6am.
Read Questor’s rules of investment before you follow our tips
