Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
magazineDigital commerce boom brightens outlook for Somero
SOMERO ENTERPRISES (SOM:AIM) 459.49p
Gain to date: 76.7%
Original entry point: Buy at 260p, 24 September 2020
Online shopping has boomed during the Covid-19 pandemic and that success has manifested itself in some surprising ways, such as the soaring share price of concrete floor flattening equipment maker Somero Enterprises (SOM:AIM).
Demand has improved across the construction industry, but the real engine for improving trading conditions is the rampant need for more warehouse space as businesses embrace digital commerce.
Large modern warehouses and fulfilment centres increasingly use automation and robotics. To work they need to move swiftly and smoothly around the property, and that means level flooring to the nth degree, which is exactly where Somero comes in.
The company has hiked its 2021 growth guidance thanks to surging demand in its key US market as the economy bounces back. That was responsible for the stock’s latest lift, but the share price has been doing well for months, up nearly 80% since we said to buy last September.
SHARES SAYS: Somero’s superior margins (around 30%), strong cash generation and a near-20% price to earnings discount to peers is attractive. The company looks increasingly like a buyout target to us, so keep buying. [SF]
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
