ALUMASC Group

Alumasc chart
Click to enlarge.

Alumasc Group plc (ALU) supplies building and precision engineering products. The principal activities of the Company are the design, manufacture and marketing of products for the building and construction industries, and the manufacture of components for a range of industrial markets.

The company announced full year results this morning, revealing underlying pre-tax profits 7% higher at £8.3m on revenues 11% higher at £26.6m. The company hiked the dividend by 8% to 6.5p, and said order books were at record levels after a 5th successive year of profit growth. Indeed ALU not only pays a healthy dividend – it also has a history of growing the dividend strongly and safely.

This ongoing success had been picked up some time ago by UK stock screening company VectorVest. The system calculates a value for each share on the UK market each evening, and for ALU, shows that despite it’s consistent track record of success, the stock is trading well below its calculated value of 200p. Yesterday’s close was 164p.

The 5 year VectorVest chart includes a Green line above the actual stock price, which represents the VectorVest Valuation. The blue line in the window below the price is the VectorVest calculated earnings per share (EPS). As can be seen, ALU has doubled EPS over the last 5 years.

During 2016, the share has pulled back to the area on the chart where previous resistance has become support. The pullback was in the form of equidistant channel or “flag” pattern. Support arrived at the confluence of both of these technical measures of the share.

This flag pattern is viewed by technical analysts as a bullish signal. The VectorVest stock screening system confirmed this support with a BUY recommendation for ALU back on the 19th of August.

Since the Buy recommendation, ALU has moved from 150p to 164p. On the back of the results this morning, and the improving sentiment across the building sector, it has risen to 170p and looks bound higher still.

 

David Paul

1st September 2016

 

 

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