Stagecoach Stock a Good Bet: Pro

UK transport group Stagecoach is a decent mid-cap investment tip according to Scott Evans, Co-Head of Equity Research at Espirito Santo Investment Bank.

Trucks on roadway.
Trucks on roadway.

Speaking on CNBC’s “Worldwide Exchange” , Evans had a positive outlook for the company even without the added boost the London Olympics would bring.

“You could say, yes, there will be a short-term small impact from further transport and passenger growth within the UK during this busy period.” He said. “I think overall it’s much more of a longer term structural play.”

He also pointed towards potential growth in the US with Megabus. Launched in 2003, Megabus is part of the Stagecoach Group and pitches itself as the market-leading budget inter-city coach operator in North America.

In the UK it’s the third largest bus operator, as well as being one of the biggest rail operators with a 49 percent shareholding in Virgin Rail Group. It’s currently bidding for several rail franchises that are due to be renewed in the coming year.

“You’ve got a business which has been relatively recession proof and has operated much better than its peer group such as National Express or First Group . It remains one of the best in class operators as a transport company.” Evans added.

At the end of June the company reported pre-tax profits for the year ended April of 239.8 million pounds ($372 million), a rise from 209.7 million pounds for the same period a year earlier.

Disclosure: Scott Evans has no corporate involvement with and no shareholdings in any with any of the companies mentioned in this article