Primary Recommendation

Polypipe - Plastic piping maker on low prospective PEof 10.4

September 2016

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.

Last month we noted that selling in sectors sensitive to a downturn has been widespread and indiscriminate and it’s often these moments (think Baghdad Bounce in 2003 and bank bail-out in 2009) when you can buy into good quality growth companies on the cheap. So it is with Polypipe, the manufacturer of plastic pipes for drainage, sewage, heating and ventilation systems, which is down from 340p pre-Brexit. In spite of a strong track record and an expectation for eps growth of 43% over the next two years, the shares trade on a prospective PE of 10.4 (eps:24p) in FY’16 falling to just 9.0 in FY’17 (27.6p).However, the idea that Polypipe will simply turn into junk is too ridiculous to contemplate. Brexit or no Brexit, its main market i ...

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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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