Trifast plc (TRI.L) is a UK-based manufacturer and distributor of industrial fastenings. The Company provides design support and problem solving solutions to its customers. The Company designs, manufactures and distributes a range of plastic components, metal fasteners and fixings on a global basis to both distributors and original equipment manufacturer (OEM) assemblers. It has has six manufacturing sites in Asia and one in the United Kingdom; with a global logistics capability from approximately 25 business locations within the United Kingdom, Asia, Europe and the United States.
In November 2017, TRI reported record breaking half-year numbers, with strong underlying trading growth driving underlying PBT 20.3% higher to £9.9m, on revenues 14.9% higher at £89.7m. Diluted EPS rose by 24.8% to 5.33p, and the group increased the interim dividend by 25% to 1p. Exec Chairman Malcolm Diamond said that the performance had put the group “firmly on track with our expectations to achieve another record breaking financial year.” A further trading update is due in early Q2.
The Trifast growth story had initially been identified by VectorVest during 2016, and on September 21 2016, we published a buy note for the group at 152p. The stock has powered higher since that time, driven by strong earnings growth, and with a trading update due at the end of Q1 2017, TRI is still flagged up as a quality investment opportunity across a number of VectorVest metrics. Value is still calculated at 220p, so currently trading at 213p, the stock has to be considered as fairly valued. Our attention though is drawn to the Relative Safety (RS) metric, an indicator of risk. Here TRI scores an RS rating of 1.38, which is very good on a scale of 0.00 to 2.00. Also highly significant is the VST-Vector (VST), the master indicator for ranking every stock in the VectorVest database, computed from the square root of a weighted sum of the squares of Relative Value (RV), RS, and Relative Timing (RT). Here TRI scores 1.32, which is very good on a scale of 0.00 to 2.00.
The weekly chart of Trifast above shows the gains over the past 6 years. The green line above the price is the VectorVest valuation of the share while the blue line in the window below the price shows earnings per share (EPS). EPS is growing strongly which is driving the share price upwards with increasing momentum. Technically the speed of the price (or momentum) should slow down prior to a turn in the price and there is no sign of that on the chart at the moment.
Summary: TRI has delivered a 38% gain since our September buy note. While the stock is now fairly valued at 213p, the prospect of a record FY performance coupled with the consistently high scores across key VectorVest metrics once again highlights TRI as a quality growth play. Keep Buying.
Dr David Paul
January 10th 2017
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