Interactive Investor

Shares round-up: Trainline, Games Workshop, Fevertree

20th May 2021 16:02

Graeme Evans from interactive investor

Ticketing app’s shares take a beating, while other stocks show promise.

Trainline (LSE:TRN) investors who clambered aboard the ticketing app's IPO in 2019 are back where they started after reforms in the rail industry led to a disastrous session for the shares.

The FTSE 250 stock fell as low as 288.6p after transport minister Grant Shapps unveiled plans to simplify the system of ticket sales through a new state-run body, Great British Railways.

Trainline sells tickets on behalf of all UK rail carriers as well as coach tickets for National Express and generated revenues of £178 million from UK consumers in the year to March 2020, a period only partly impacted by the Covid-19 pandemic. It also has two smaller divisions targeting business travel and the sale of international tickets.

Shares were priced at 350p in the June 2019 IPO, when Trainline was valued at £1.7 billion in one of the UK's biggest listings of that year. They rose as far as 547p prior to the pandemic hitting demand in February 2020 before reversing to 256p by November.

Optimism over the re-opening of travel sent them back above 500p in early March, with recent results pointing to the potential offered by the acceleration of online and digital channels after 70% of all e-tickets were sold by Trainline in the past year.

The company also flagged its longer-term prospects through significant investment in high-speed rail and greater environmental awareness of the benefits of rail versus air and car.

Its outlook is now far from certain, adding strength to the short positions taken by six different firms including George Soros' investment management business. Shares later steadied at 334.2p, a fall of 22% on the day, after Trainline issued a statement at lunchtime saying it was supportive of the findings of the review, which it added were in line with its expectations.

Chief executive Jody Ford highlighted comments made to Parliament by Shapps that independent retailers will continue to compete in the retail ticket market.

Ford added: “We are hugely encouraged by the commitment to digital ticketing, which Trainline has championed over the last several years, and the introduction of flexi tickets and digital season tickets, which will provide new growth opportunities in the evolving commuter market.”

Elsewhere in the FTSE 250 index, publisher Future (LSE:FUTR) moved in the opposite direction to Trainline as its shares rose another 9% or 248p to 2,898p, taking the rally since yesterday's better-than-expected half-year results to more than 20%.

The new owner of the GoCompare price comparison site, whose magazine titles include PC Gamer and Classic Rock, is trading materially ahead of market forecasts thanks to a combination of strong organic growth and margin progression.

Shares have jumped more than 75% since late November, but analysts at Numis Securities believe there's further to go based on a new price target of 3,090p.

Games Workshop (LSE:GAW) is another second-tier stock continuing to reward investors as it revealed plans to pay a dividend from surplus cash of 50p a share on 5 July. This takes total dividends for the 2020/21 financial year to 235p a share, compared with 145p the year before.

Despite a long period when its UK and European stores were subject to Covid-19 closures or distribution disruption, sales in the year to the end of this month will be not less than £350 million. This is up from £270 million the year before as the maker of Warhammer miniatures continues to meet strong global demand through online channels.

Profits will be at least £150 million, compared with £89 million in 2019/20 to continue the Nottingham-based company's remarkable record of growth.

The shares, which are the top holding of Keith Ashworth-Lord's CFP SDL UK Buffettology fund, rose 150p to 11,180p for a valuation of more than £3.6 billion. They peaked at 11,730p in January, having been 6,640p a year ago.

Posh tonics firm Fevertree Drinks (LSE:FEVR) is another popular stock with retail investors where the shares are showing a robust return to form. The AIM-quoted company has now risen by 21% since early April, including today's 5% improvement to 2,698p after its AGM was told that trading remained in line with expectations for the 2021 financial year.

As the hospitality industry begins to re-open, it said at-home consumption of long mixed drinks remained popular amid strong support from retailers and spirits companies. This was seen in UK off-trade sales for the 13 weeks to 18 April being 10.1% higher year-on-year, despite lapping the effects of stockpiling at the beginning of the first lockdown.

Shares were higher despite Fevertree reporting industry-wide logistics cost pressures at the start of 2021.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.