- Could this tempting recovery story take longer?
- An ad tech Aim stock moving to the Nasdaq
One of this week’s companies is a manufacturer looking to use a fairly smart new strategy to drive more output through its largely fixed operating cost base. The other company operates in the very new and rapidly evolving world of dynamic, personalised advertising - it trades on a sizable discount to both its peers and its own history, but is it value or a value trap?
Eurocell (ECEL) – this is a plastic building products manufacturer selling components into the highly competitive and highly cyclical uPVC window sector. Reliant on house moves and new builds, the market backdrop has been weak in 2024 but could be about to turn as long as the reversal in once falling mortgage rates does not go too far. Not reliant solely on a cyclical recovery, Eurocell is undertaking a number of smart initiatives to push for more market share and a toehold in new end markets. These have the great advantage that they will need little (if any) additional manufacturing capacity. That means any additional revenue delivered will make a high margin contribution, potentially propelling the business towards its £50mn EBIT (earnings before interest and tax) goal: this is two-thirds higher than the current forecast for 2026.
