Why Shares In Thomas Cook Group Plc Took Off

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares in Thomas Cook (LSE: TCG) soared by more than 13% in early trade this morning, following positive final results describing the year just gone as “transformative”.

So what: It is the first time in three years that Thomas Cook has been able to report an operating profit — the shares have now recovered almost 700% in the last 12 months when the airline operator looked almost down and out. Earnings before interest and tax (EBIT) rose by 49% against last year, from £177m to £263m, with management stating that they have “taken out more cost more quickly than originally planned”, and the balance sheet has also been strengthened.

Now what: Far from completing its turnaround, chief executive Harriet Green emphasised that the group’s return to profitable growth “has only just begun” and is “confident of delivering significantly more”. The audited results also included further cost-cutting plans, and increased three of its key targets for 2015.

Investors will be asking themselves how much more there is to come from the stock that sunk as low as 8.84p at the end of 2011. But our team of top analysts have highlighted a different share that they believe has yet to fulfill its growth potential, and produced a special report in which we evaluate its finances, risks and growth prospects going forward. 

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> Sam does not own shares in Thomas Cook.