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The backdrop is improving for the company and the shares are also starting to edge up
Thursday 14 Oct 2021 Author: Mark Gardner

FRP Advisory (FRP:AIM) 124p
Gain to date: 1.6%
Original entry point: Buy at 122p, 16 September 2021

Shares in FRP Advisory (FRP:AIM), the insolvency and business advisory firm, have nudged up 1.6% since we said to buy on 16 September. We continue to believe the company is well positioned to benefit from an increase in insolvencies and administrations as the Government winds up pandemic-linked solvency restrictions.

The UK’s furlough scheme to support employers expired at the end of September, while Government support loans, commonly referred to as ‘Bounce Back Loans’, were replaced in March with the Recovery Loan Scheme.

A recent report published by the Bank of England revealed that 33% of small and medium sized enterprises had debt levels of more than 10 times their cash balances, compared to 14% before the Covid-19 outbreak.

According to the Bank of England’s financial policy committee ‘insolvencies are likely to rise from the fourth quarter of 2021 as Government support is withdrawn as planned’.

The environment for FRP Advisory is improving, and we believe a patient approach by investors will be rewarded, given the potential earnings upside to current market estimates.

The next catalyst for the share price could be a trading update scheduled for mid-November.

SHARES SAYS: Keep buying. 

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