A Couple of Contrarian ideas
Posted: March 21st, 2023, 7:55 pm
Here's a couple of stocks I have picked up shares in over the last few months. Both are exposed to the construction market so both may be in for a fall in profits over the next year or two, but neither of them look expensive to me on historic earnings. Profits at both would have to fall a fair way and stay there before I'd conclude that I'd paid too much for the shares.
Alumasc PLC (ALU)
https://www.alumasc.co.uk/
They describe themselves as the sustainable building products, systems and solutions Group. They have three divisions: Building Envelope, Housebuilding products and Water Management.
The market cap is about £56m and in the last full year they recorded a profit from continuing operations of over £10m. The first half of this year has started well enough with a profit of £4.5m and they seem fairly comfortable about the outlook for the second half.
The balance sheet is not too bad but nothing special with modest debt and cashflow going forward should improve a bit due to the pension deficit recovery payments falling after the last triennial valuation.
The dividend yield is about 6.5% and this is well covered from earnings.
Tyman PLC (TYMN)
https://www.tymanplc.com/
This is a somewhat larger company than ALU with a market cap of £462m. In the last full year's results announced recently they made a profit of £47.8m so once again on an undemanding multiple.
Once again the balance sheet is not too bad with seemingly manageable net debt and cashflow seems perfectly capable of supporting the dividend yield of around 5.5% forecast for this year.
I have had a punt that earnings and dividends at neither company will fall too far over the next couple of years, I'm currently at around breakeven on both, does anyone have an opinion on why I am wrong?
Alumasc PLC (ALU)
https://www.alumasc.co.uk/
They describe themselves as the sustainable building products, systems and solutions Group. They have three divisions: Building Envelope, Housebuilding products and Water Management.
The market cap is about £56m and in the last full year they recorded a profit from continuing operations of over £10m. The first half of this year has started well enough with a profit of £4.5m and they seem fairly comfortable about the outlook for the second half.
The balance sheet is not too bad but nothing special with modest debt and cashflow going forward should improve a bit due to the pension deficit recovery payments falling after the last triennial valuation.
The dividend yield is about 6.5% and this is well covered from earnings.
Tyman PLC (TYMN)
https://www.tymanplc.com/
This is a somewhat larger company than ALU with a market cap of £462m. In the last full year's results announced recently they made a profit of £47.8m so once again on an undemanding multiple.
Once again the balance sheet is not too bad with seemingly manageable net debt and cashflow seems perfectly capable of supporting the dividend yield of around 5.5% forecast for this year.
I have had a punt that earnings and dividends at neither company will fall too far over the next couple of years, I'm currently at around breakeven on both, does anyone have an opinion on why I am wrong?