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Authoritative Independent Monthly Share Selections Using Technical & Fundamental Analysis

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Prezzo - Restaurant operator sees substantial director buying

May 2009

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.

  • Epic Code:
  • PRZ
  • Price:
  • 29p
While restaurant operators have understandably been de-rated over fears of cuts in eating out budgets, the fall in mid-market pizza chain Prezzo's shares from a peak of 93p in May '07 to a low point of 20p in March looks to be a clear case of overkill. Even after its recent bounce Prezzo's market value is still just £67m, which after taking into account net cash of almost £10m and freeholds worth another £10m, means the underlying business is currently ascribed a value of just £47m. The shares effectively trade at around 3x cash flow, which is an extremely attractive entry point. Prezzo was founded by Jonathan Kaye and his Uncle Philip, a serial entrepreneur who needs little introduction, having rolled out ...

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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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