Insider: Time to catch these three fallers?

Travis Perkins seeks firm base

Builders merchant Travis Perkins took a big hit after the EU referendum and has failed to make any recovery attempt stick. Full-year results this week condemned the shares to a 10% slump and seven-week low.

A 2.7% rise in like-for-like revenue in 2016, underlying pre-tax profit flat at £381 million and 2.3% increase in the dividend to 45p appear to reflect management's view of a "solid performance in mixed markets".

But traders were having none of it, and you only have to scrape the surface to see why. Add back a whopping £235 million writedown and reported profit plunged 67% to £73 million and earnings per share (EPS) collapsed 92% to just 5.1p.

Travis's low-margin plumbing and heating division is causing all the problems. Adjusted operating profit there fell 15% last year to £39 million, and further restructuring work is needed over the next six months.

Economic uncertainty, growing competition from web operators, and a trend for boiler and plastics supply chain to cut out the middle man get the blame. A weak pound has increased the cost of imported materials, too, and there are concerns about both the housing and repair, maintenance and improvement (RMI) markets.

Management does have a good record on cost control, true, and it's confident it can repair the damage. Chief operating officer Tony Buffin certainly thinks concerns are overdone.

Buffin, who was promoted last year after more than three years as finance director, spent well over £144,000 on 10,000 Travis shares at £14.44 on the day of the results.

We were told last September that Buffin will have line responsibility for the plumbing and heating division and lead development of Toolstation in the UK and Europe. Sounds like he has his work cut out!

Pull on your Coats

Coats Group, still referred to by those of a certain age as Coats Viyella, has had a fantastic year. Shares in the industrial thread and textiles firm have nearly tripled following a series of bullish updates.

There was lot's to like in the latest annual results published last week, too. A 1% increase in organic revenue to $1.457 billion was a touch shy of City forecasts, although a 14% jump in operating profit to $158 million exceeded estimates.

Settling pensions issues also meant Coats has begun paying dividends again sooner than expected. A final payout of 0.84 cents is small fry, yes, but management promises to pursue a progressive dividend policy.

However, and despite an optimistic outlook, investors decided to book profits and bailed out, tipping the shares down to prices last seen early in January, not long after Rajiv Sharma took over as chief executive following the departure of Paul Forman.

And Sharma, who used to run Coats' industrial division, has taken advantage of share price weakness, snapping up 200,000 shares at 56p. Finance director Simon Boddie did, too, adding 100,000 to his account at 56.5p each.

On a forward price/earnings (PE) ratio of 11 for 2017, UBS analyst Jessica Kaur believes there's an opportunity here. She rates Coats shares a 'buy' and thinks they could be worth as much as 80p, implying 38% potential upside.

Go-Ahead going backwards

It's also worth noting that Go-Ahead's finance boss Patrick Butcher this week spent almost fifty grand on shares in the owner of the abysmal Southern rail franchise.

Weary commuters on one of the country's busiest rail lines have been told a normal service may not resume until the end of 2018. Alongside half-year results, Go-Ahead warned that this could hit annual profit by as much as £15 million.

After Go-Ahead shares plummeted on the news, Butcher more than doubled his stake in the business to 4,363 shares after purchasing 2,477 at £20.07 each.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.