It’s not often we get to write about UK companies which have seen their shares multiply in value by a factor of 20, especially when the company concerned makes what might be considered ‘disposable’ or discretionary goods.

Yet, given the sudden contraction during the pandemic in corporate advertising – one of the quickest and easiest areas of spending most firms can cut – the success of 4Imprint (FOUR) in not just bouncing back but setting new sales records is quite phenomenal.

The firm sells promotional products in North America, the UK and Ireland to help customers build their brands and ‘make lasting connections’ with their own clients. In mid-July, 4imprint raised its full year revenue target well beyond market expectations.

The company revealed total orders for its primary North American business in the first half of this year were running around 14% above the level of 2019, the last ‘normal year’ of operations pre-Covid, thanks to market share gains and strong demand from new and existing customers.

Moreover, the value of its average order was also 14% higher than three years ago, meaning overall revenues were in the region of 30% above 2019 as customers spent more on promoting their goods and services.

As a result, 4Imprint said it would likely hit its long-held target of $1 billion of revenues this year, almost double what it made in 2020 and 16% more than it made at its previous peak in 2019.

Analysts scrambled to revise up their estimates and the shares, which were languishing at £24, below their closing level of 2020, rocketed skyward.

Having struggled to break above their pre-pandemic close, the shares were drifting when last week the company issued another trading update to say it had posted record sales and orders and was even more confident of hitting its $1 billion revenue target.

That pushed the shares to new highs just shy of £40, meaning investors who bought the shares back in 2012 at approximately 200p have made 20 times their money even before accounting for dividends.

With supply chain challenges easing and product cost inflation ‘stabilising’, margin pressure should be less acute in the second half while pre-agreed price increases will boost earnings.

Also, the acquisition of a small screen-printing business will give the firm the capability and capacity to service untapped demand for apparel and support continued market share growth.

As Liberum analyst Joe Brent points out, operational leverage is coming through and the firm is getting more bang for its buck on each marketing dollar. He believes the case for a special dividend has increased.

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