While it would be a mistake to blindly replicate the actions of any superstar money manager, it’s always worth keeping an eye on recent additions to the portfolios they run. Here are just two companies that have grabbed Neil Woodford’s attention over the last few months.
Market leader
Having participated in the IPO, market minnow Global Yachting Group (LSE: GYG) — which specialises in providing painting and refit services to the super-yacht industry — now makes up 1.4% of Woodford’s relatively new Income Focus Fund. Since the end of August, the share price has climbed a very solid 22%, suggesting this was another inspired move by the closely-followed fund manager. Based on recent interim results, this kind of positive momentum looks set to continue.
In the six months to the end of June, GYG increased group revenue by 19.4% to just under £34m. Adjusted earnings before interest, tax, depreciation and amortisation soared by almost 275 to £3.3m, even if exceptional items (most of which related to the aforementioned IPO) did lead to the company reporting an operating loss of £1m. As of 30 June, the company had £4.7m net cash on its books.
Boasting a record order book of £56.7m by the end of August, it doesn’t look like GYG will be short of work any time soon. Indeed, the company has already identified a £385m pipeline of projects it is looking to secure, £90m of which relates to the ACA Marine coating division — a recent acquisition.
Trading on 17 times expected earnings, GYG also boasts a low price-to-earnings growth (PEG) ratio of 0.7 for the current year, indicating good value. In addition to this, the cash generative nature of its business should be of interest to income hunters with the shares expected to yield 1.9% in the current year before rising to a very tempting 4% in 2018/19.
Growth and income at a reasonable price? Sounds pretty good to me.
Hot stock
Another intriguing recent pick from Woodford has been AIM-listed Strix (LSE: KETL) — a market-leading manufacturer of kettle safety control products.
Like GYG, this is a company that seems to be performing well, even if recent interim results relate to a period before it became available to investors to own. Revenue for the six months to the end of June increased by 6.7% to £42.2m with pre-tax profit rising 9.6% to £10.3m.
According to CEO Mark Bartlett, the Isle of Man-based business is making “solid progress” on its initiatives which include the launch of its new U9 range of controls. Strix’s export sales have also been “particularly strong“, up around 10% on the previous year. Positively, the company appears to be increasing its market share even further by securing deals with major European retailers at a time when a number of products from competitors are being withdrawn.
Although still very early days, the positive start to Strix’s time on the stock market bodes well. Like GYG, its shares still look great value, trading as they do at just 12 times earnings. The company boasts a net cash position, high operating margins, a huge number of patents and growth potential in emerging markets. So long as you — like Woodford — can ignore the incredibly dull but undeniably important nature of what it does, Strix could be a decent addition to your portfolio.
