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magazineApplegreen profit is ripe for picking
APPLEGREEN (APGN:AIM) 365p
Gain to date: 14.1%
Original entry point: Buy at 320p, 4 June 2020
Our ‘buy’ call on roadside convenience retailer Applegreen (APGN:AIM) has generated a rapid-fire return, with the shares speeding as high as 380p on 8 June.
Though they’ve settled back to 365p, eagle-eyed investors who spotted the surge will have been able to lock-in the 15% profit we targeted once the shares hit 368p. Anyone else could still at the time of writing take a very respectable 14.1% profit off the table on this short-term trade.
We identified that shares in the Applegreen brand owner, which also has a majority stake in motorway service operator Welcome Break, had positive momentum at their heels.
Investors have begun to price in a recovery of fuel volumes and food and drink sales as measures to come out of lockdown drive a gradual increase in road usage. We also suggested that if consumers are unable to travel overseas for summer holidays, then Applegreen might also benefit from a staycation boom.
Applegreen is a high-quality, cash-generative concern, but it also has a large net debt position – €545m as at 20 March – which means the investment comes with risk, although management insist the business has enough cash resources to trade through a downside scenario where the recovery period is more prolonged into 2021.
SHARES SAYS: Shares in Applegreen recently motored past our 368p target return price and we think risk-averse investors should take profit and move on.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
