News Article Comments : Punch’s shares take roller-coaster ride

Share values are hard to get your head around sometimes. Take Punch Taverns. It floated on 27 May 2002, with its shares worth 230p each. Values climbed to a high point of £13.23 within the past year, before declining to a shade over £2 at one stage on Tuesday morning.

Anyone thinking of buying a Punch pub-lease assignment in 2002 for, say, £60,000, would have been much better advised buying Punch shares instead and doing nothing. To do so would have seen the £60,000 grow 5.75 times to £345,000 at the high point — an averaged-out gain of around £57,500 per annum plus dividends for each of the five years from 2002 up to a fortuitous sale at the high water mark.

To hang on to Punch shares beyond the high point would have seen the £345,000 shrink back to less than £60,000. Meanwhile, Punch has almost trebled profit before tax from £93m for the year ended 17 August 2002 to £133m for the six months to 1 March 2008. Punch’s shares are on a price-to-earnings ratio of 2.68 — remember manage