Secondary Recommendation

Biffa - Waste services provider a likely bid target in consolidating sector

February 2007

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

The old saying of "Where there’s muck there’s brass" seems to fit perfectly with waste collection and landfill operator Biffa (FT sector: Support Services), which was de-merged from water utility Severn Trent last October. In the past seven years, it has grown revenue and operating profit at a compound annual rate of 19% and 25% respectively and has now become the third largest player in the fast consolidating waste management sector. The fact that this industry is characterised by multi-year contracts and very solid cashflows has clearly not gone un-noticed with the shares regularly hitting new highs in recent months and US broker Lehman Brothers is the latest to warm to its potential, noting that a buyer would ha ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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