I’m really not familiar with this area but I think I’m going to dip in if there’s another drop next week, for the following reasons:
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Likelihood of lower commodity (copper) inflation that market currently expects, at least long-term. This should be a tailwind as company has pricing power anyway and should be able to increase margin should prices ease. If I’m wrong and there’s a giant commodity supercycle, hey, that’s still more revenue, although greatly priced in already.
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Uncertain macroeconomic backdrop/deglobalisation. Lots of talk about UK stocks being a safer bet with historic underperformance and could see them do well this year if rate/inflation/vaccine uncertainty continues to mess around with US/EU/EM. Has a lot of exposure to domestic UK industry, which brings me onto…
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Revenue visibility and low valuation. Guided capacity of £50m pounds by years end, and there’s that £38m contract with Arrival (just completed merger). Near-term £3m+ pipeline with quite diversified customer profile (not too reliant on EVs). Revenue projections are conservative given Arrival alone is worth £12m+ a year.
As I say I’m really not sure if this is a long-term hold. I don’t know enough about the competitive threat to IHT and would probably dump before Arrival contract is finished.