Interactive Investor

Insider: FTSE 100 buying and a top small-cap

14th February 2022 07:46

Graeme Evans from interactive investor

One is a FTSE 100 consumer goods giant, the other is a top-performing green economy small-cap. Their results have led to buying among directors.

Directors at one of 2021's top-performing small-caps have spent £70,000 on shares after their sustainable building products firm endured a tougher start to the stock market year.

The purchases by long-serving Alumasc (LSE:ALU) chief executive Paul Hooper, his chairman Vijay Thakrar and another executive director were made in the wake of Tuesday's interim results.

The latest figures showed the Kettering, Northamptonshire-based company on track to meet annual forecasts, aided by a record performance from its water management division as it grows its share of the civil drainage and roofline markets.

Progress was offset by lower profits at its building envelope division as a result of Covid-19 slowing new build commercial market projects. The company's third operating division, the Timloc housebuilding products arm, continued to perform well.

In the results, Alumasc said it was in a “very strong position” to benefit from the move towards sustainable construction and green buildings, such as water and energy conservation.

Shares fell 3% to 217.5p after the results and are down 5% so far this year, in line with the building materials sector, and by 22% from their multi-year high of 288p seen in July.

The AIM-listed shares doubled over the course of 2021, but the company has still kept its place on Peel Hunt's 35-strong list of top small-cap picks for 2022.

The house broker has retained a “buy” recommendation and target price of 295p after last week's results. It said the group is in better shape than five or 10 years ago, having undertaken a business streamlining in order to focus on building materials.

Peel Hunt said an improved balance sheet also provided financial freedom for bolt-on acquisitions to take the group to the next level. The interim dividend lifted 3% to 3.35p, payable on 6 April.

Analysts at Finncap Capital Markets have a price target of 315p, noting that the shares are on a price/earnings multiple of below 10 times, compared with the peer group average of 15 times.

Finncap said: “Supply chain and inflationary challenges are being well managed and price rises have mitigated inflationary effects.

“A much stronger second-half performance is anticipated, underpinning guidance that the group remains on track to deliver current expectations.”

Alumasc floated on the London Stock Exchange in 1986 and enjoyed considerable success making precision engineering components and aluminium beer barrels in the 1980s and 1990s, until being hit by competition from lower-cost economies.

It switched to construction and building products in 2006, with its environmental focus recognised in November through the London Stock Exchange Green Economy Mark.

Chief executive Paul Hooper, who was appointed in 2003, bought shares worth £33,000 at a price of 222p on Thursday, while chairman Vijay Thakrar bought his shares worth £29,000 a day earlier at a price of 215p. On the same, day an associate of executive director Michael Leaf bought shares worth £7,850 at a price of 212p.

Unilever surge

Board members at Unilever (LSE:ULVR) and PZ Cussons (LSE:PZC) have backed their respective companies to withstand the cost headwinds blowing through the consumer goods industry.

Non-executive director Adrian Hennah bought his first Unilever shares in a purchase worth £150,000. The investment on Friday has already delivered a decent paper profit after the Marmite and Dove soap maker posted that day's best performance of the FTSE 100 index, closing the week at 3,914.5p compared with Hennah's purchase price of 3,762.5p.

The 4% surge came after Thursday's resilient full-year results and promise of a three billion euros (£2.5 billion) share buyback helped investors to move on from the distraction caused by Unilever's failed £50 billion bid for the consumer healthcare arm of GlaxoSmithKline (LSE:GSK).

Unilever forecast underlying sales growth of between 4.5% and 6.5% in 2022, driven by expectations that it will be able to pass on high cost inflation through further price rises.

Hennah, who has been chief financial officer at Reckitt Benckiser and Smith & Nephew, joined the board in November and is also non-executive director at Sainsbury's and Oxford Nanopore.

At PZ Cussons, non-executive director Jeremy Townsend spent more than £20,000 on shares in the wake of the Carex and Imperial Leather maker reporting interim results.

His investment was made at 201.5p on Wednesday, with the shares closing the week at 208p after the FTSE 250-listed firm said it remained on track to meet full-year forecasts. The business returned to revenues growth in the second quarter and the strength of its brands appears to be offering some margin protection in the face of cost headwinds.

Townsend, who joined the board in 2020, is an experienced finance director who has worked at Rentokil Initial, Mitchells & Butlers and Sainsbury's.

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