Where next for Compass Group after £30 food packs furore?

by Alistair Strang from Trends and Targets |

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The share price of the Chartwells owner doesn’t need much to break free from the limbo of recent months.

Compass Group

We never suspected Man United footballer Marcus Rashford would end up helping food company Compass Group (LSE: CPG) with their income levels.

Amazingly, his personal initiative for free school meals had a knock-on effect. A subsidiary of Compass Plc, their education catering arm called Chartwells, provoked a bin fire on Twitter and some wider media yesterday for the meal packs they supply to hungry children.

Multiple photographs were shared illustrating just what sort of food the company provides for children for 10 days with a budget of £30.

If you haven’t seen this, the answer is ‘not a lot’.

Rather a few folk opted to visit their local Spar or Tesco to discover the real cost of the 'Chartwells Child Hamper', most agreeing the full retail value would be just over £5.  

Compass Plc are a seriously large concern, operating in 45 countries and employing over half a million people.

Presently trading at around 1,405p, Compass certainly does not require much work to break free of the hiatus of recent months, but who knows if Mr Rashford’s efforts to feed hungry children nationwide shall assist, or how yesterday’s news will affect things.

Share price movement next exceeding 1,475p should prove capable of a price lift to an initial 1,626p. If exceeded, our longer-term secondary calculates at 1,970p and visually should challenge the pre-Covid-19 high from February of this year. Only with closure above 1,970p dare we express true longer-term ambition as a distant looking 2,569p becomes possible.

As always, there's a 'however', and it emanates from the Covid-19 drop in March. The share price managed to dance lower than we would expect, reaching a pitiful 865p.

This has created the unpleasant situation where weakness anytime now below 1,325 risks reversal to an initial 1,086p with secondary, when broken, at a bottom of 800p and hopefully a realistic rebound.

Source: Trends and Targets. Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of interactive investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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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.

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