One to watch: Capita

Published on Wednesday 13 July 2011 22:26

OUTSOURCING specialist Capita has an impressive record; over the past 20 years, sales have moved from £20 million to £2.7 billion, albeit flattered by acquisitions, the most recent being the purchase of Ventura, the third-party customer services arm of Next; Ventura has 8,000 employees in the UK and India.

Capita is the UK's biggest business process outsourcer with a market share of some 30 per cent, with roughly half the company's overall revenue derived from the public sector and the balance from private sources.

Companies such as Capita have seen their share ratings coming under pressure this year on concerns over the outlook for central UK spending. This caution is understandable but there appear few signs of these worries translating into a loss of corporate momentum, quite the opposite, in fact.

Capita's shares, a constituent of the FTSE 100 index, are off their peak this year of nearer 800p and, supported by a prospective yield of more than 3 per cent, the recent period of under-performance could well be an opportunity to take a closer look.

Capita

710p +12.5p

Scotsman says BUY

• The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt on the suitability of this stock for your portfolio.

BROKER SNAPS

BrainJuicer

296p -2.5p

Broker says HOLD

CANACCORD Genuity has downgraded its recommendation on market research firm BrainJuicer from "buy" to "hold" following an "in-line" trading update. The broker added: "The shares have doubled in price in the past 12 months. We think that further near-term upside from here is limited."

St James's Place

351.1p +9.3p

Broker says OUTPERFORM

RBC Capital Markets has begun coverage of financial services group St James's Place with an "outperform" rating. Analyst Gordon Aitken said St James's Place – which is part-owned by Lloyds Banking Group – is "currently the best-performing stock in the European insurance sector" and should gain market share.