Compass Group is The Share Centre's pick of the week, read why

Graham Spooner, investment research analyst at The Share Centre, explains why Compass Group is his share of the week.

The world’s largest contract caterer, Compass Group, provides food and other services to customers in 50 countries, with growth particularly in North America and Europe contributing to revenues up 5.2% according to the firm’s third quarter update.

Compass is a defensive business with almost 50% of its operations in the healthcare, education and defence sectors and is therefore likely to be less susceptible to economic downturns. The company expects to keep seeking small and medium sized companies that it believes will support its current portfolio. Interested investors will appreciate that the firm benefits from the growing trend by companies to outsource catering in order to cut costs.

We are recommending Compass as a 'Buy' for long term lower risk investors due to the strongly defensive nature of the business, good sales growth in some of its biggest markets, a healthy new contract pipeline and rising profit margins. Following the rise in the share price year to date, we would recommend investors drip feed into the shares.


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