Primary Recommendation

GKN - Cycle of massive upgrades for automotive and aerospace supplier

April 2012

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

GKN, which makes specialist parts for the automotive and aerospace industries, belongs to that select group of industrial engineering shares that have posted eye-opening gains in the past 12 months. Traditionally regarded as risky and unglamorous by investors, these businesses nonetheless have the propensity to surprise, usually in the early stages of a new economic up-turn, when analysts often under-estimate both the recovery in volumes as well as the operational gearing inherent in these asset intensive businesses. For GKN this has translated into a massive cycle of broker upgrades; just over two years ago brokers were originally expecting eps of 7.7p in 2010 and 12.1p in 2011 but in the event the company smashed these numbers by posti ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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