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Small cap consumer goods firm shrugs off supply chain issues

SUPREME (SUP:AIM) 195p
Gain to date: 4%
Original entry point: Buy at 187.5p, 27 May 2021
Our bullish call on Supreme (SUP:AIM) may be a modest 4% in the money but we remain enthused by the growth and income potential of the fast-moving consumer products maker.
The shares were boosted by a positive trading update (18 Oct) from the batteries, vaping and vitamins specialist, which flagged a strong performance in the first half to September 2021 and remains confident in achieving full year expectations.
Margins have proved ‘particularly strong’, enabling Supreme to generate ‘significant’ year-on-year growth in profitability.
Positive momentum has continued in its vaping division, it has seen good growth in the sports nutrition and wellness category and the batteries category ‘continues to be a defensive and predictable profit contributor’.
Reassuringly, as Supreme manufactures key vaping and sports nutrition products in-house, it has proved ‘relatively unaffected’ by the global supply chain issues affecting other areas of the economy.
Back in July, Supreme posted impressive results for the year to March 2021, showing a 21% surge in adjusted pre-tax profits to £16.4 million on sales up a third to £122.3 million, and a maiden dividend is expected alongside December’s first half.
SHARES SAYS: Still a buy at 195p.