Sunday share tips: Mitchells and Butlers, Facilities by ADF
By Alexander Bueso
Date: Sunday 30 Jan 2022
(Sharecast News) - The Sunday Times's Robert Watts thinks readers should be shares of Mitchells & Butlers.
In his The Tipster column, he expressed confidence that the strong labour market would help keep the taps "flowing nicely".
"And while rising national insurance, inflation and higher energy costs will squeeze consumer spending this year, an outpouring of abstinence looks unlikely," he added.
Watts also noted the pub owner's "healthy" balance sheet, which at last count had £235m on it and undrawn credit of £150m.
He also hailed management's actions to shore up the company's pension fund and the fact that Mitchelss&Butlers owned 80% of its freeholds.
Furthermore, analysts, such as those at Jefferies, expected it to take market share during the current re-opening thanks to its well-maintained estate.
Its ownership of the All Bar One franchise also meant that the company was "particularly" well-placed to benefit from the end of work-from-home guidance.
The Financial Mail on Sunday's Midas column recommended readers 'buy' stock of Facilities by ADF, pointing out that it was poised to profit from fast growth in its sector and as the UK consolidated its position in the entertainment industry.
The UK itself has won great appeal as a location for movie studios. Film and TV contributed nearly £12.5bn to the UK in 2021, for a 24% jump over the past five years, and studios are being built across the country.
Facilities by ADF contributed the state-of-the-art trucks and trailers used by actors alongside the well-trained professionals required on filming sets.
According to the tipster, the company's shares, which were floated on the AIM market at the start of June "should increase materially" in value over the next five years and thereafter.
Its roster of big clients includes Amazon Prime, Disney, Warner Brothers, Netflix, the BBC and Sky.
Midas also notes the positive share price performance of Brickability's shares, which floated in September 2019 and is also chaired by John Richards.
Chief executive officer Marsden Proctor meanwhile knows the industry inside and out, having begun in the facilities business 26 years before as a driver.
Furthermore, full-year sales are expected to have nearly doubled across 2021 and dividends are also on the cards and the plan is to grow sales to £100m in five years' time.
"Midas verdict: Facilities by ADF may have an unusual name, but there is nothing strange about the business itself," Midas concluded.
"A well-regarded operator in a fast-growing industry, the company is ideally placed to benefit as the UK cements its position in the entertainment industry. As the business expands, the shares should follow suit. At 63p, the stock is a buy."
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