Why Chemring Group plc’s Shares Skyrocketed

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares in Chemring (LSE: CHG) jumped up more than 11% in early trade this morning, following the publication of its post-close statement.

So what: The defence company revealed that it has identified “a number of business units within the Group which do not form part of its longer-term strategy”, and has begun the process of divesting some of these non-core assets, which will lead to “an improved financial position for the Group”.

Now what: October’s US government shutdown saw Chemring’s share price suffer, plunging by 20% in a single day as it revealed its North American business had been materially affected by the impact. However, today’s statement also brought confirmation that the “issues regarding the US Government shut down have largely been resolved”, and the shares have rebounded up to 216p at the time of writing from a 2013 low of 187p. Bearing in mind that the shares traded around 321p prior to the troubles Stateside, value investors may think there is still a buying opportunity if the company can use the money from the divestiture wisely.

While Chemring's price was crashing, our team of top analysts were more interested in a FTSE 250 share that has steadily been rising over the last 12 months, one that they believe has yet to fulfill its growth potential.

So we produced a special report in which our team evaluate the share's finances, risks and growth prospects going forward -- simply click here to get your copy delivered to your inbox immediately -- completely free.

> Sam does not own shares in Chemring.