LUCECO (LUCE) 186.5p

Gain to date: 60.1%

Original entry point: Buy at 116p, 19 December 2019

If February and March provided some pain for investors who followed our Luceco (LUCE) investment idea, they’re certainly getting rewards now. The stock has gone bananas, shooting to levels not seen since 2017, and delivering a 60% gain since we said to buy last December.

The recovery in the LED lighting and portable power products maker from the worst of the pandemic shutdown has been astonishing, clearly catching management and analysts out in equal measure. This was a real bolt from the blue, with an update on 19 August coming barely a month after Numis had to rethink its 2020 estimates for the second time.

The latest forecast revision is significant, with Numis analyst Kevin Fogerty hiking his adjusted earnings before interest and tax (EBIT) and earnings per share (EPS) by 22% and 29% respectively above the July-issued estimates. His forecasts for 2021 were given a similarly marked upgrade.

What this means is that 2020 EPS of 11.6p per share is now anticipated, where 9p was predicted just a month ago. EPS of 12.1p has been pencilled in for 2021. So even after the stock’s soaring run it remains undemanding in valuation terms, on a price-to-earnings multiple of 16, falling to 15.4 next year.

SHARES SAYS: Stick with the shares as Luceco clearly has
positive sales momentum.

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