The fall in Sterling since the EU referendum has caused some hurt, but companies engaged in manufacturing and export should be enjoying a significant boost. Here are two that have excited investors recently:
Growth at a price
Halma(LSE: HLMA) shares have gained 29%, to 990p, since their February low, even after a retreat from last month's peak. They're down a little today, after the firm released its first-half results.
Halma, which is engaged in environmental and safety technology, posted a 12% rise in adjusted pre-tax profit to £83.6m and a 13% EPS jump to 17.23p (with statutory equivalent gains of 2% and 4% respectively).
The interim dividend was raised by 7% to 5.33p, continuing the firm's progressive policy of recent years and in line with a forecast year-end lift to yield 1.4%. It should be well covered, but I think that's a bit of a disappointing yield from a mature company with good cash generation and only modest debt. Debt is down a little from the year-end, at £237.3m, which is really nothing to worry about for a £3.75bn company.
Chief executive Andrew Williams said that "...order intake has continued to be ahead of revenue and order intake last year", telling us that the fall in Sterling has helped.
Halma been a successful growth stock in recent years, with annual EPS growth averaging around 10%, and that looks set to continue with City analysts forecasting a further 15% this year followed by 8% next.
But over five years the shares have soared ahead of earnings. And though I like the safety of Halma's international reach, I can't help seeing P/E multiples of around 25 as being a bit too rich -- if it came down to under 20, I might be interested.
Shine a light
Turning to a different technology stock, and a much smaller company, Dialight(LSE: DIA) has been showing some great recovery potential of late. The firm produces LED technology for industrial and commercial use, and that's a field with growing demand.
Dialight suffered a couple of years of declining earnings and fell to a pre-tax loss last year, but August's first-half results showed the start of a turnaround in underlying profits, which chief executive Michael Sutsko said "shows the early benefits of our improvements to Dialight's operating model".
An update this month told us that "trading performance for the full year remains in line with current market consensus", partly through currency exchange benefits, and that suggests we're on for an EPS rise of around 65% -- with those forecasts having been beefed up since the Brexit vote. Analysts are predicting a further 55% in 2017, together with an impressive return to dividends -- a yield of only around 1.6%, but well covered and a quick recovery.
The big question is whether Dialight shares are worth buying at today's valuation, which puts them on a forward P/E of 33, dropping only as far as 21 on 2017 forecasts.
But those strong EPS predictions provide investors with tempting PEG ratios of 0.5 this year and 0.4 next, where growth investors typically see 0.7 or less as a good sign. On that score, the shares look cheap, and with dividends coming back I think I'm seeing a good opportunity here -- but with the caution that if we see a set of results that aren't at the top end of expectations, we could see fickle shareholders jumping ship and forcing a share price fall.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.