Premium content from Motley Fool Hidden Winners UK
Our monthly Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of small-cap recommendations, to help Fools build out their stock portfolios.
“Best Buys Now” Pick #1:
Goodwin (LSE:GDWN)
Why we like it: “Established in 1883, Goodwin (LSE: GDWN) is one of our favourite ‘family companies’ in the UK — boasting a long, outstanding track record of creating wealth for the select few lucky shareholders who have uncovered it. Family-run businesses, in our experience, tend to be cut from a different cloth from your average listed company — there are few greater motivators for a management team than continuing and protecting a proud legacy, especially when much of your family’s wealth is tied up in the business.“The company still operates its historic steel foundry business in Stoke, but has expanded to include manufacturing subsidiaries around the world – 70% of Goodwin’s sales come from abroad, serving global oil & gas markets, the mining industry, and others. It obsesses over the quality of its offerings, positioning itself as a key supplier to blue chip companies in the manufacturing of specialised components such as check valves and slurry pumps. It might not be glamorous, and investors won’t thrill too many people talking about Goodwin’s products down the pub or at a dinner party. But Goodwin makes a fortune from its position within these ‘boring’ areas of expertise, and it goes to show the value of mastering something simple.”
Why we like it now: Goodwin announced outstanding preliminary results on 7 August. For the fiscal year ended 30 April, revenue increased by 27%. The board proposed an increased dividend of 133 pence, up from 115 pence per share. Strategic investments in the nuclear waste storage industry and key components for the naval propulsion and hull construction markets by the Mechanical Engineering Division have come to fruition. The Group has demonstrated strong cash generation capabilities, reducing the gearing ratio from 47.8% to 35.1% while still incurring £16.42 million in capital expenditures for future growth.
