Masks mammoth Avon Rubber(LSE: AVON) has turned out to be a splendid pick for momentum investors in recent times.
The stock has gained 16% in value during the past six weeks alone, including a 5% advance in Tuesday business. And I reckon the defence play has what it takes to surge past current 18-month peaks.
Today's fresh spurt was prompted by news that revenues rose 22% during October-March, or 7% at constant currencies, to £81.1m. And this helped underlying pre-tax profit explode 22% to £10.7m.
And a healthy order book suggests that sales should continue ticking higher. Orders received chugged to £90.7m during the six months to March, up 24% or 9% at constant exchange rates.
Strength in depth
And Avon cheerily reported stunning demand growth across the business. At its core Protection & Defence division, revenues sailed 22% higher to £55.9m. While sales of its M50 respirator to the Department of Defense (DoD) fell to 93,000 units from 107,000 a year earlier, the 131,000-mask order chalked up in the half provides terrific sales visibility looking into 2018.
And despite the recent DoD sales drop, Avon noted that "sales to foreign military, law enforcement and first responder customers increased year-on-year as the portfolio continues to grow." On top of this, it noted that it expects to receive orders from Middle Eastern customers during the year.
But perky demand for the company's headgear isn't the only cause for celebration. Indeed, sales at Avon's Dairy division also soared 22% between October and March, to £25.2m, as improving milk prices have boosted demand for its InterPuls and Milkrite products.
While the City expects Avon to endure a rare 13% earnings dip in the full year ending September, the business is expected to rebound immediately with an 8% rise in fiscal 2018. I would consider a consequent forward P/E ratio of 17 times to be great value given that demand for Avon's dairy and defence products is growing across the globe.
A smoking pipe play
Construction play Polypipe Group (LSE:PLP) has also seen its share price click through the gears in recent weeks.
Indeed, a blockbuster full-year report in late March has since sent Polypipe's stock value soaring almost 20% to current record peaks. Investors piled-in after news that revenues soared 24% in 2016, to £436.9m, a result that shoved pre-tax profit 31% higher to £54.4m.
Share pickers took heart from Polypipe's view that "[the] underlying fundamentals and growth prospects in the overall UK construction market remain positive," a point underlined by latest trading numbers. Indeed, like-for-like sales at home rose 10.5% during the year, suggesting a healthy sales uptick more recently as underlying sales growth during January-October came out at 8%.
For 2017 City brokers expect Polypipe to enjoy a 7% earnings bounce, and to follow this up with a 9% advance next year. Given that market conditions remain strong, and Polypipe has a proven record of outperforming the broader market, I reckon a prospective P/E ratio of 15.6 times represents terrific value.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.