BUY: Computacenter (CCC) – AI Growth Tailwinds
After several sluggish years, Computacenter is finally seeing the benefits of the AI wave. US hyperscalers’ rush to build data centres drove a 58% rise in North American income in the first half. UK sales also grew 20%, marking a return to expansion.
The order backlog is up 23%, pointing to further momentum. Management expects operating profit to beat last year’s figures, even as Europe remains softer. At just 13 times forward earnings, the stock looks attractive. Demand for AI and IT infrastructure gives strong long-term support, even if short-term volatility continues.
SELL: Mobico (MCG) – Debt and Operational Struggles
Mobico’s market value has halved in 12 months, and its latest results offered little comfort. First-half operating profit fell 12.7% to £59.9mn, with North American transit and UK coaches still under pressure.
A £238mn impairment tied to the US School Bus unit highlights balance sheet fragility, despite the $364mn sale easing debt. Guidance for £180mn–£195mn in adjusted operating profit looks weak against these structural issues. Shares trade at just four times cash profits, but high debt and competitive headwinds make the risk/reward unattractive.
HOLD: Funding Circle (FCH) – Patience Required
Funding Circle has bounced back post-pandemic as banks retreat from SME lending. Interim results showed a £6mn profit versus a loss last year, with financing inflows up sharply to £42mn.
The bigger question is sustainability. Management targets £30mn pre-tax profit by 2026, but that depends on a supportive economy and continued loan demand. Shares trade on a forecast P/E of 16, leaving little room for error. For now, holding seems the prudent option.
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