Trading: catch this coach company

Bus and coach operator National Express has expanded into promising markets abroad – and it looks cheap

US school buses are a lucrative sector
(Image credit: billnoll)

Sometimes the best opportunities come in sectors that sound desperately dull. Take buses and coaches, probably the least exciting form of transport as they are slower than planes and railways and lack the high-tech glamour of ridesharing services. However, they are ideal for short and mid-length journeys since they are cheap, while they are also more environmentally friendly than some other forms of transport. And as far as operators are concerned, they don’t require much capital investment. One of the most attractive coach companies is National Express (LSE: NEX).

National Express is best known for its intercity coach services in Britain, where it accounts for 60% of the scheduled coach-service market; it also operates local buses outside London. In recent years, however, it has moved stealthily into other markets. It now gets 40% of its revenue from the United States, with the UK only in third place behind Spain. Similarly, it gets half its revenue from contract services, notably the lucrative market for operating school buses in the US. This expansion has enabled it to grow its revenue at an annual rate of 7.1% and its earnings per share by 11.4% a year over the past five years.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri