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Sunday share tips: PPHE, Keystone Law

By Alexander Bueso

Date: Sunday 14 Apr 2024

Sunday share tips: PPHE, Keystone Law

(Sharecast News) - The Financial Mail on Sunday's Midas column labelled shares of PPHE an "attractive long-term buy" citing their valuation.
Independent experts had valued the hotel group's portfolio at £26.72 a share, versus the £14.80 on which the shares were trading.

The shares had recovered partially from their pandemic induced halving in value, rising from £9.83 during Covid-19 to £14.35.

But shares in the company, which both built and ran hotels, had yet to fully recover.

For Midas that was "unjustified", given how PPHE had posted record results posted in 2023 and given the good start to 2024.

Furthermore, management had suggested that good growth lay ahead.

"Shareholders can also take comfort in the founders' continued support for the business: with 43 per cent of the stock between them, they are highly motivated to see PPHE succeed."

The Sunday Times's Lucy Tobin told readers shares of Keystone Law were a 'buy', pointing to the shares significant outperformance versus peers over the last five years, when not more.

Key to the listed law firm's success was its entrepreneurial business model and 500 self-employed lawyers who shared a limited amount of centralised infrastructure.

Artificial intelligence was another factor, as large companies no longer saw "massive" legal costs as a routine part of doing business.

Keystone's costs were falling too, now that the 2023 salary price war for new recruits appeared to have largely run its course.

The importance of that was that the firm's ability to sign up new lawyers was key to the business's scalability.

Tobin also empohasised the company's ability to throw off cash and finance a progressive dividend policy, plus the previous year's special payout.

"The numbers may still be small but Keystone's highly cash-generative business model is shaking up a fusty industry," Tobin said.

"It's an eminently scalable platform with minimal capital demands, and still good value. Buy."


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