SERCO (SRP) – Business Services Price: 264p +4.8%P/E: 16.3xMarket Cap: £2.6bnYield: 1.7% In its pre-close trading update, outsourcing firm Serco has forecast earnings for 2025 and 2026 slightly ahead of market expectations thanks to its burgeoning order book. For this year, the group now sees underlying operating profit at £270 million, ahead of the consensus of £265 million, while for next year underlying profit is seen around £300 million against market forecasts of £285 million. The main driver of the results is expected to be defence, which accounts for two thirds of this year’s £5.5 billion order intake. Our View…

STHREE (STEM) – Business Services Price: 185.5p +7.9%P/E: 13.4Market Cap: £229m  Yield: 7.8% Specialist employment group SThree posted a 12% drop in net fee income for the year to 30 November, but encouragingly the company confirmed its pre-tax profit guidance. Investors also took heart from an improving trend over the four quarters, underpinned by the US returning to growth, and the strength of the contractor order book at five months’ worth of net fees. Our View: Recruitment firms are leading indicators on the business cycle as companies tend to hire when they are feeling positive about their prospects and stop…

GOODWIN (GDWN) – Industrials Price: £204 -5.6%P/E: 68xMarket Cap: £1.55bnYield: 2% Engineering group Goodwin posted a ‘solid’ 1H performance with trading profits for the six months to 31 October more than doubling from £17.1 million to £37.2 million. Steel Castings and the international business continue to see ‘robust’ demand from the defence and nuclear sectors, while pumps saw mixed trading with softness in Australia and Brazil offset by strength in India and South Africa. Full-year profit guidance is unchanged at ‘above £71 million’, with order cover underpinning activity for the second half. Our View The absence of an upgrade to…

GLOBAL SMALLER COMPANIES TRUST (GSCT) – Investment Trusts Price: 177.3p n/cNAV: 190.7pMarket Cap: £770mYield: 1.75% The Columbia Threadneedle-managed trust put in a reasonable performance in the half-year to 31 October with a 15.6% increase in NAV, although this lagged the total return benchmark of 21.6%. As the chair remarks, and as we can attest, this year has been tough for investors in good quality growing businesses at attractive valuations, with the market chasing more speculative stocks or those already trading at elevated valuations (see Goodwin). The trust continued to buy back shares, but the discount still widened to 11.6% as…

BAE SYSTEMS (BA.) – Aerospace & Defence Price: £16.73 +0.5%P/E: 23.7xMarket Cap: $49.6bnYield: 2.1% Defence group BAE Systems has offloaded the majority of its stake in Kazakh airline AIR ASTANA (AIRA) through the sale of nine million GDRs (global depository receipts) at a price of $5.80 each, raising $52.2 million. The stake represented 10.1% of the airline’s capital, leaving the UK group with a further 6.9% of the shares, which are subject to a 90-day lock-up. Our View The sale price represents a hefty discount to yesterday’s closing price of $6.70, but Air Astana has been something of a dog…

BUNZL (BNZL) – Business Services Price: £20.58 -6.9%P/E: 15.2Market Cap: £6.9bnYield: 3.3% Specialist distribution group Bunzl released a short and fairly downbeat trading statement ahead of its year-end on 31 December confirming its revenue and operating profit guidance. It sounds as though activity picked up in the final quarter, helped by new business wins in North America, so the margin decline should be less in the second half than the first half, but it’s not much to write home about. Moreover, for 2026 the group sees ‘moderate’ revenue growth, which sounds like the 2%-3% posted this year, and a further…

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TT ELECTRONICS (TTG) – Industrials Price: 104.7p -20.9%P/E: 47xMarket Cap: £190mYield:1% After announcing last week it was considering a possible offer for TTG, DBAY Advisors has turned round this morning and said it’s not making an offer. However, it might make an offer if the current offer from Cicor is withdrawn or lapses, or if a third party makes an approach or there is a ‘material change of circumstances’. Our View DBAY owns 25% of the shares in TT Electronics and has previously rejected Swiss-based Cicor’s 150p per share offer as ‘unattractive’. Having said it might make a bid, it…

HIKMA PHARMACEUTICALS (HIK) – Healthcare Price: £14.95 -1.4%P/E: 10.5xMarket Cap: £4.45bnYield: 4% A month after the firm lowered its outlook, Hikma chief executive Riad Mishlawi is out the door and chairman Said Darwazah is stepping back in while the company looks for a new candidate. Group guidance remains unchanged from the 6 November trading update and the full-year results will be released on 26 February 2026. Our View With the shares down around 25% year-to-date and sitting at their lowest since late 2023, it was inevitable something would have to give and in time-honoured tradition the chief executive has fallen…

FILTRONIC (FTC) – Aerospace & Defence Price: 147p +2.8%P/E: 49x Market Cap: £320mYield: n/a AIM-listed electronics maker Filtronic has been selected by a ‘major European defence prime’ for high-performance components for a long-standing project. The order proper begins in Q1 2026 and is worth £11 million over two years, deepening the firm’s position with the customer and within the European defence sector which is a growing market. Our View This quite a decent order for Filtronic, as consensus revenue forecasts for FY26 and FY27 are £55 million and £63 million respectively, so analysts are going to have to upgrade their numbers…