Gamble of the week: Turnaround dry-cleaners

This struggling high-street dry-cleaners has had the turnaround treatment. That makes the shares a speculative buy, says Phil Oakley.

Five years ago, Johnson Service Group (LSE: JSG) almost went bust. Its dry-cleaning business suffered during the recession as consumers had their suits and dresses cleaned less often. What's more, the high street's demise as a shopping destination hasn't helped matters either. This made it hard for the company to pay the interest bills on its debt.

Turnaround specialist John Talbot was brought in to sort things out. He has done a very good job. Investors have put up more money and over 100 unprofitable dry-cleaning shops have been closed. Last week, the company sold its facilities-management business and its portfolio of private finance initiative (PFI) contracts. Most of the debt has gone and the shares have become more popular, with the share price up more than 70% on this time last year. But I think there's more to come.

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Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.