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Niche building products play enjoys deals momentum

Alumasc (ALU) 184.5p

Gain to date: 5.7%

Original entry price: Buy at 174.5p, 9 Feb 2017

Niche building products play Alumasc (ALU) is in buoyant mood as its order book hits a record £32.9m (21 Feb).

The company’s Levolux business has won three new UK contracts to supply bespoke balcony and balustrading systems (with a cumulative value of £5m) in the three weeks since publication of its half year numbers on 31 January.

ALUMASC GROUP - Comparison Line Chart (Rebased to first)

This momentum is being matched in the share price and our trade on the stock is now comfortably in the money.

We think the shares will keep rising as the year progresses. The focus on specialist areas and plans for international expansion can help Alumasc outperform the modest growth expected in UK construction in the coming months. Revenue growth of 17% was posted in the first half of its financial year to June 2017.

Profitability should recover in the second half as the company passes through higher raw material costs. Announcements like this latest one from the company should help educate the market on its shift from engineering conglomerate to premium building products.

Stockbroker FinnCap has a price target of 225p, implying upside of more than 20% at the current share price. We remain bullish (TS)

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