I hate UK stocks. But this setup checks all the boxes, and it trades on the LSE Main Market, not AIM. That means you can actually build a position; liquidity is OK. Despite that, there are no write-ups on ValueInvestorsClub, MicroCapClub or other Substacks.
Here is the essence of the pitch:
It’s a one-two punch. First, I believe the company is going to sell its weakest business segment. This should lift group margins from around 8% to double digits. I think this will serve as catalyst for a re-rating more in line with industry peers. The company trades at under 8x FY27 EBIT, while peers would justify 12x+.
Second punch: the company is exposed to growing end markets such as aerospace and defense, as well as the semiconductor capex cycle. Now that the operational turnaround is complete, I believe the company can grow its top line by high single digits to double digits in the coming years. That would drive higher operating margins and justify a higher multiple. Fast-growing peers trade at 20x+ EBIT.
The company is…