Primary Recommendation

Southern Cross - Care homes operator eyes more acquisitions

February 2008

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 main factor behind the powerful share price performance of SouthernCross, the UKâ€™s largest care home operator, lies in the astonishingspeed with which it has gobbled up smaller rivals in its relativelyshort life as a public company. Indeed last year it increased thenumber of beds by 25% to more than 36,000, putting clear blue waterbetween it and its leading rivals. This, plus the powerful trendssupporting its business, notably an ageing population and a governmentwilling to throw money at public health, has meant that brokersâ€™forecasts have been lifted on several occasions. The latest point toeps increasing from 18.5p to 28.2p this year, 33.8p next and nearly 40pby 2010 and even this aggressive rate of growth could be surpassed ifSo ...

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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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