Wednesday tips round-up: RyanAir, Shawbrook

27th May 2015 11:01

RyanAir has discovered that a little love can go a long way. So while it carried a record 91m passengers in the year to March and registered a two-thirds rise in profits, there is still momentum to be had in the company. On the downside, the carrier has already hedged nine-tenths of this year's fuel purchases at a painful $92 a barrel and is hedged at 1.33 in the euro/dollar.That gives it less wiggle room than IAG, although easyJet has also locked in the price for the majority of its fuel costs this year. However, the Irish company has a low cost base and the ability to raise average fares and other revenue. That explains how it was able to increase its net margins to 15% from 10% a year back. It also enjoys robust finances and access to inexpensive debt. Hence, it can continue to add fuel-efficient aircraft to its fleet. Guidance for 100m passengers next year and profit growth of 10% - the mid-point of its guidance - also look realistic. "RyanAir has realised that market share is its to lose," writes the Financial Times's Lex column.Despite the announcement that its chief executive Richard Pyman will be taking some time off to recover from exhaustion, recently-listed business bank Shawbrook has some key positives. It has a narrow focus, for example with a growing presence in in specialist areas such as taxi finance. Nonetheless, the question for all challenger banks is how they will perform once economic conditions worsen and if they can sustain their recent rapid rates of growth. However, over time the stock should prove a good investment and it has a "top-notch" chairman, Iain Cornish, the ex-boss of Yorkshire Building Society, coming in soon, says The Times's Tempus.