Severfield, Filtronic and Journeo – Another Three Cheap Stocks On The Move

Severfield (LON:SFR) – Cheap Shares Despite In Line Expectations

In the AGM Statement from this Thirsk-based structural steel group, investors were informed that trading since the start of the financial year has been as expected and that the group remained on track to deliver a result for 2025 in line with its expectations.

It is the UK’s market leader in the design, fabrication and construction of structural steel, with a total capacity of around 150,000 tonnes of steel per annum.

The group has seven sites, some 1,900 employees and expertise in large, complex projects across a broad range of sectors.

It also has an established presence in the expanding Indian market through its joint venture partnership with JSW Steel, which is India’s largest steel producer.

The £253m capitalised group’s cash and balance sheet position remains strong.

The businesses remain well-positioned to win work in markets with positive long-term growth trends, providing it with a strong platform to fulfil its strategic growth aspirations.

Analyst Joe Brent at Panmure Liberum rates the shares as a Buy, looking for 130p in due course.

For the current year to end March 2025 he goes for revenues of £551m (£463m) with adjusted pre-tax profits of £36.6m (£36.5m) generating 9.3p (8.9p) of earnings and paying a dividend of 4.0p (3.7p) per share.

This group’s shares are a bargain at just 83p.

(Profile 12.09.19 @ 62p set a Target Price of 88p)

(Profile 08.09.23 @ 61p set a Target Price of 75p*)

Filtronic (LON:FTC) – Ready To Roar Away With LEO

I do like the feel of this Sedgefield-based group and that is despite its shares having been trading at just under 500 times its 2023 price-to-earnings.

However, the finals for the year to end May 2024, released on Tuesday, showed a hefty increase in sales from £16.3m to £25.4m, with its Space side generating some 50% of its business.

For this year we now look for the last year, when they rose 34 times to £3.4m adjusted pre-tax (£0.1m).

This year the group could nearly double that latest reported figure to £6.4m, with earnings almost doubling from 1.4p to 2.7p per share.

This group designs and manufactures products for the aerospace, defence, space and telecommunications infrastructure markets.

This year it has signed a major 5-year Strategic Partnership with SpaceX, a market leader in low earth orbit space communications, for the supply of Cerus solid state power amplifier products at multiple frequency bands.

It has also won contracts with the European Space Agency, BAE Maritime Services and Qinetiq, as well as continuing business with the UK Defence Science and Technology Laboratory.

Chairman Jonathan Neale stated that:

“The success in FY2024 has given us a very strong basis for our business as we look ahead into FY2025.

We continue to prove that we have the technology, products and skills to compete internationally with the best.

Whilst we wait to see what the new government’s UK industrial strategy will look like, we remain confident that in the critical technology areas, including sovereign semiconductor packaging capability, we have a meaningful role to play.”

Analysts Edward Stacey and Kimberley Carstens at Cavendish Capital Markets now estimate that the year to end Maay 2026 will show £40.0m in sales, £7.6m adjusted pre-tax profits and 2.9p per share in earnings.

As far as I see it – this group is on a major uplift in its fortunes, with nothing but growth in store for at least the next five years.

Forget the earnings rating being accorded to its shares currently and look instead at the massive growth prospects in its marketplace.

I see the shares, now 71p, going to well over the 100p level within the next year.

(Profile 04.02.22 @ 11.6p set a Target Price of 14.5p*)

(Profile 04.01.24 @ 21p set a Target Price of 24p*)

(Profile 26.06.24 @ 67p set a new Target Price of 80p)

Journeo (LON:JNEO) – Beginning To Travel Again

This little Ashby-de-la-Zouch-based group is the provider of intelligent transport solutions to operators and authorities across the UK 

The Trading Update for the H1 period, to end-June, reported group revenue had increased by 17% to £25.6m (£21.8m), while adjusted profit before tax increased by 54% to £2.8m (£1.8m).

The group, which is a leading Intelligent Transport Systems provider, delivering solutions in towns, cities, airports and the public transport networks that connect them, with its sales order book at end June some 33% better at £24m, while the group’s sales opportunity pipeline had increased to £60m.

Revenue for the full 2024 year is expected to be some £50m, marginally ahead of current market expectations, with adjusted profit before tax expected to be £0.4m ahead at £4.8m.

CEO Russ Singleton stated that:

“The record performance in H1 2024 and the uplift in sales order intake reflect the success of Journeo’s strategy to harness government-backed growth opportunities in the transport industry.

There is increasing recognition by our target client base of our expertise in delivering leading-edge solutions that meet the challenges of increasing the number and quality of journeys using public transport.

We continue to listen to our customers and invest in the research and development of future technologies and software, focusing on high performance, reliability, and sustainability.”

Analyst Andrew Renton at Cavendish Capital Markets is now upping his Price Objective for the group’s shares to 470p.

He is looking for £50.0m (£46.1m) revenues this year to end December, with adjusted pre-tax profits of £4.8m (£4.0m), generating 23.5p (19.8p) in earnings per share.

For the 2025 year he goes for £52.0m sales, £5.0m profits and 23.8p earnings.

I can see why Renton has a 470p Price Objective on the shares of this ££6.7m capitalised company, which boasts £12.8m cash in the bank.

Now at 257p, up 30p after the Update, the shares are a very good Hold.

(Profile 07.04.21 @ 95.5p set a Target Price of 120p*) 

(Profile 24.03.23 @ 147.5p set a Target Price of 175p*) 

(Asterisks * denote that Target Prices have been achieved since Profile publication)