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Over the previous 5 years, the Rolls-Royce share worth has soared 1,228%. That form of efficiency is outstanding for a mature blue-chip firm. For comparability, the broader FTSE 100 is up by 59% throughout the identical interval.
However with a market capitalization of £91bn, Rolls-Royce is clearly well-known to many buyers — and intently watched.
There are different UK shares which can be a lot smaller however which have additionally been doing effectively – and that I believe might doubtlessly proceed to do effectively in future.
Robust information circulate
A type of is Journeo (LSE: JNEO).
I wrote just some days in the past that having already invested in Journeo, I hoped the share worth may fall a bit so I might improve my stake.
Since then, issues have gone the opposite manner. Journeo jumped in current days following information of an acquisition that the Metropolis appeared to love.
That signifies that the Journeo share worth is now up 58% because the begin of the 12 months – and 817% over the previous 5 years.
However that also means its market capitalization, at £78m, is sufficiently small to fly beneath many buyers’ radar.
Easy enterprise, with sizeable potential
The most recent acquisition presents cross-selling potential for Journeo, doubtlessly serving to it improve its share of spend by present purchasers in addition to hopefully attracting new ones.
What I like about Journeo’s enterprise mannequin is that it’s easy however efficient.
With ongoing spending on public transport like trains, its potential finish market is about for sustained progress. However there are a restricted variety of gamers providing the types of options it does, equivalent to bus arrival time show boards. The extra contracts it wins, the extra credibility it positive factors to bid for brand spanking new contracts – and hopefully construct economies of scale.
Journeo has operations exterior the UK: for instance it has been supplying gear to New York Metropolis’s subway system. Hopefully that worldwide footprint will develop.
However, for now no less than, I see that as secondary to the funding case. The UK market alone for the transportation-related services Journeo is advertising is sizeable and set to develop. Merely persevering with to develop its market share right here might finally be an enormous win for Journeo.
Seeking to the long run
That helps clarify why this UK share now trades on a price-to-earnings (P/E) ratio of 18.
That will not look low cost. However with current contract wins and the acquisition doubtlessly set to see earnings develop, the possible P/E ratio might fall. Final 12 months’s diluted earnings per share grew 36%.
The acquisition brings a danger that administration could concentrate on integrating the enterprise and neglect the present one. Nevertheless, administration has been doing a sterling job recently and I’m optimistic that may proceed.
I believe this UK share, even after rising greater than 800% in 5 years, nonetheless appears to be like like a attainable discount. I plan to hold onto my shareholding and see Journeo as a share for buyers to think about.
