Aston Martin and Countrywide

“The FTSE continues to stage a comeback after the summer lull with another 0.1% advance to 7,625 on Wednesday. Utilities lead the charge with United Utilities, Severn Trent and National Grid all in positive territory,” says Russ Mould, Investment Director at AJ Bell.

Aston Martin

“Aston Martin is set to be London’s highest profile stock market listing in a very long time. The company says floating is a key milestone in its history and it is arguably also a major breakthrough for the general public.

“Hundreds of thousands of people across the UK will have dreamed of owning an Aston Martin car with its price tag sadly out of reach for most. Now is their chance to finally own part of the Aston Martin empire, albeit a slice of the company rather than something that will take them soaring through the rolling hills of the British countryside.

“Buying shares in the company is likely to be much cheaper than buying a car, although the equity rating on which Aston Martin trades is likely to be a separate debate. A very strong brand, a return to profitability and clear momentum with new product innovation would suggest it could command a premium stock market valuation once it joins the market.

“You’re also looking at a prime candidate to join the FTSE 100 soon after floating in London. Aston Martin is expected to command a £5bn market valuation. That would slot it in at position number 93 should it be in the FTSE 100 today, bigger than Royal Mail, Direct Line and Rightmove.

“One would expect the IPO to be very successful and the shares to be in demand from the general public, potentially pushing up its valuation soon after listing and almost certainly securing it a place in the blue chip index at the next quarterly reshuffle.

“However, the one thorn in the company’s side is a history of financial problems including seven bankruptcies. Some investors may be less forgiving and refuse to get involved with a company with such a volatile sales history.

“The brand strength is unquestionable but at the end of the day some investors will only want to get involved if the business can sell more units than it did in the previous year and at a higher price, and continue this trend ad infinitum.”

Countrywide

“Estate agency Countrywide is starting a new chapter in its history after shareholders gave the nod to a dilutive fundraising to fix its distressed balance sheet.

“The stock tops the FTSE All-Share, with the new shares set to be admitted tomorrow morning.

“Having backtracked on a generous incentive plan for management, a key sticking point for investors, the focus is now likely to turn to how the fortunes of the business can be improved.

“This is likely to represent a significant challenge. The estate agency world is being disrupted by online platforms which don’t have the costs associated with Countrywide’s high street estate and the UK property market is cooling off.

“The revamped management team and the recovery plan, both unveiled in March, may not get much time to turn things around though.

“Ahead of the shareholder vote on the fundraise the chief executive of online rival Emoov Russell Quirk told the media he had made informal approaches to acquire the business and other predators, who see value in Countrywide’s roster of brands, might also be circling.”

These articles are for information purposes only and are not a personal recommendation or advice.