Shares in focus: Should you hitch a ride with the AA?

Shares in the AA are trading on the open market below their issue price. Is this a chance to grab a bargain or should you steer clear? Phil Oakley investigates.

The iconic motoring group looks cheap, but it's struggling and mired in debt, says Phil Oakley.

Private investors are not short of new share issues to buy these days. However, they weren't invited to subscribe for any shares in the recent AA flotation. So with the shares now on the open market and trading below their issue price, is it a good time to snap some of them up?

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Swipe to scroll horizontally
Ticker:LSE: AA
Share price:248p
Market capitalisation:£1.37bn
Net assets (April 2014):-£2.2bn
Net debt (April 2014):£2.96bn
P/e (Historic):8.9 times
Dividend yield:N/A
Interest cover:2.1 times
ROCE:35%

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.