Tag Archives: carclo

Ossett-based Carclo Plc (CAR.L), together with its subsidiaries, designs and manufactures technical plastic products. The company operates in two segments, Technical Plastics and Precision Products. The Technical Plastics segment engages in the designing and manufacturing of close tolerance plastic components for the automotive, medical-optical and teletronics industries. The Precision Products segment provides designing and manufacturing of a range of lighting and control systems for the automotive and aerospace industries. The company also offers applied research into the digital printing of conductive metals onto plastic substrates. The company operates primarily in the UK, North America, the Czech Republic, and the People’s Republic of China.

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On June 6^th, CAR published FY year results for the year ended 31 March 2017. FY PBT more than doubled to £10.5m (2016: £3.9m) on revenues 16.2% higher at £138.3m. Underlying operating margin increased by 60bps from 8.4% to 9.0%, while EPS rose to 11.5 pence (2016: 3.3 pence). CAR reported a strong order book and momentum into the new financial year, prompting upbeat comments from Chairman Michael Derbyshire: “Having exited the year with record order intake and pipeline, we remain on course to deliver strong improvements in returns over the coming years to our shareholders.”

This exceptionally strong improvement in numbers had already been flagged up by the VectorVest stock screening system as far back as the January trading update. Flags from the system include the VST -Vector master indicator that ranks every stock in the VectorVest database. The VST metric logs CAR at 1.25, which is excellent on a scale of 0.00 to 2.00. Also the VectorVest GRT (Earnings Growth Rate), which reflects one to three year forecasted earnings growth in percent per year, currently shows forecasted GRT for CAR of 21.00%, which again VectorVest considers to be excellent. In terms of valuation, VectorVest logs a current rating of 212p per share, indicating CAR is currently undervalued at its current 167p.

The chart of CAR.L is shown above using a weekly candlestick format. As always the green line study above the price charts the VectorVest calculated valuation of the share while the blue line study is the earnings per share (EPS). The share has been consolidating within a five wave ascending triangular formation for the last three years. In this time EPS has grown significantly. The share is on a VectorVest Buy signal and is nearing a breakout of the ascending triangle for the fourth time. Markets normally break on the fourth attempt and with the improved fundamentals a breakout looks highly probable. The technical target from the breakout would be around 240p.

Summary: Regular readers of my articles will note that I am a fan of companies such as Carclo that manufacture a diverse range of fixtures and fittings covering a wide range of industries and applications. Trifast is another similar example discussed here several times previously. Those readers will also note that VectorVest metrics flagged the opportunity at CAR long before the spike higher in the share price that has taken place over the past few weeks. This diversity and impressive growth in cash generation marks out CAR as a quality and enduring investment opportunity, despite the recent share price movement. Buy.

Dr David Paul

June 21st 2017

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