Stock of the week: G4S
The world’s leading security solutions group, G4S, is on course with its restructuring programme. Management are implementing a transformation programme and addressing the financial situation of the company in order to cut costs, debt and improve efficiency. Following the recent management changes due to past problems, the board anticipates the programme will restore faith in the group.
The group specialises in outsourcing business processes in sectors where security and safety risks are considered a strategic threat. Investors should note that future prospects for the company should be helped, as in an unsettled world demand for security work is unlikely to fall significantly. Also, investors will appreciate that the share price has been recovering since Brexit and this is a sign that confidence in the group is improving.
Following the latest update the shares now trade on 13.6 times prospective earnings and 4% yield. We recommend G4S as a higher risk, long-term recovery buy idea for a contrarian investor.