Shares in Africa-focused budget airline Fastjet (LSE: FJET) are up by 15% today following news released this week detailing the appointment of a new CEO. The market seems to have reacted well to the appointment of Nico Bezuidenhout, who’s currently CEO of South African budget operator Mango Airlines, with Fastjet’s shares rising by 31% in the last week.
Clearly, the recent past has been rather challenging for Fastjet, with shareholder unrest causing investor sentiment to come under a degree of pressure. And due to operating challenges, the company’s financial outlook has also been rather uncertain and this has been reflected in Fastjet’s share price fall of 52% since the turn of the year.
Looking ahead, Fastjet is expected to remain lossmaking in each of the next two years and while a new CEO could be the catalyst to deliver improved performance in the coming years, it may be prudent to await further news on a new strategy before piling-in. Certainly, the African airline industry has huge growth potential, but the timing doesn’t appear to be right to buy Fastjet at the present time.
Shares on the rise
Also rising today are shares in Koovs (LSE: KOOV), with the India-focused fashion company recording a rise of 10%. This comes a day after Koovs announced a capital raising of around £3m from HT Media through the issue of 12m new shares in the company. This forms part of Koovs’ capital-raising strategy, with it being in addition to £300,000 raised from Dragon Asia Holdings and the £21.9m raised earlier in the year.
In terms of its long-term outlook, Koovs has significant growth potential and appears to have the capital required to deliver on its strategy. However, with it being a lossmaking business and forecast to remain so in each of the next two financial years, there may be better opportunities available elsewhere. That’s especially the case since a number of UK-listed retail stocks offer wide margins of safety at the present time while also being highly profitable.
Brexit woes
Meanwhile, shares in SThree (LSE: STHR) have fallen by around 8% today after the specialist staffing company released a rather disappointing half-year trading update. It said the uncertainty caused by the EU referendum has led to a slowdown in its UK business, with it experiencing mixed trading conditions during the period.
Specifically, SThree’s Energy, UK business and Banking & Finance divisions performed relatively poorly, but this was offset to a large degree by strong growth from the company’s European operations and across its ICT business. As such, SThree’s group gross profit rose by 6% versus the first half of the prior year and it remains confident in its long-term outlook.
With SThree trading on a price-to-earnings growth (PEG) ratio of 0.6, it seems to offer a sufficiently wide margin of safety to merit investment at the present time. Clearly, there are short-term risks from Brexit and its financial performance in the short run may come under a degree of pressure. But for long-term investors it remains a sound buy.
