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magazineBank of England prediction for rising insolvencies good for FRP
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financial policy committee ‘insolvencies are likely to rise from the fourth quarter of 2021 as Government support is withdrawn as planned’.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.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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- ASML is still a core holding for investors despite big share price rally
- Bank of England prediction for rising insolvencies good for FRP
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