Sunday share tips: Goodwin and Volex
By Benjamin Chiou
Date: Sunday 03 Dec 2023
(Sharecast News) - The Mail on Sunday's Midas column has recommended buying shares of UK-listed industrial firms Goodwin and Volex.
The paper said that Goodwin's large product mix is primed for the future. Its solid position in the defence, nuclear, mining and jewellery markets has been years in the making. And yet, the company is committed to developing new products, like a specialised polymer resin used to make semiconductors, the paper pointed out.
Meanwhile, with the market for lithium-ion batteries expected to increase by 30% annually over the next six years, Goodwin could stand to benefit, Midas says, given it has developed a solution that puts out lithium-ion fires safely and effectively.
"Goodwin's product mix is large but the unifying thread is a focus on making exceptionally high-quality goods to attract new customers and ensure existing customers will stick with it. The family also believes in the power of profit, generating cash to reinvest in the business and pay dividends to shareholders," the Midas column said.
Last year's results showed a 30% jump in revenues and a 7% increase in dividends, and more growth is forecasts for several years ahead.
"The UK steel industry has been under pressure for decades, hit by rising costs, falling demand and intense competition. Goodwin runs one of the oldest foundries in the country but this robust family business shows what can be done with ingenuity, clear sight and true grit," Midas said. "At £50.40, these shares are a long-term buy."
The paper also sees Volex as a good investment, despite the stock's decent performance over the past year or so, on the back of a turnaround led by financier Nathaniel Rothschild back in 2015.
"Rothschild and his team have devoted time and energy to turning Volex round, through a combination of organic growth and selective acquisitions. [...] In order to make Volex more resilient to economic cycles, Rothschild has expanded across five key industries: consumer goods, medical equipment, electric cars, industrial technology and off-road vehicles, such as trucks and diggers." the paper said.
The company's recent half-year results showed the benefits of this diversity, with sales up 11% and profits rising 15.5%.
"Volex has also deliberately chosen to work in industries with long-term growth prospects. And a global network should make the firm more resilient, including the recent purchase of Turkish offroad specialist, Murat Ticaret, which is a big player in Europe and is now expected to expand into North America," Midas said.
Since the paper recommended Volex in September 2022, the shares have risen 18% to 310p, but brokers reckon they should hit 400p over the coming 12 months. Midas said: "Nervous investors may want to bank some profits after recent gains but they should retain some stock as Rothschild and his crew are determined to deliver much more growth and rising dividends too."
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