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Bargain Shares: On the hunt for value

A trio of anomalously priced small-cap companies offer potential for their ratings discounts with peers to narrow.
Bargain Shares: On the hunt for value

Earnings upgrades and contract wins are key share price drivers as shareholders in small-cap niche packaging engineering specialist Mpac (MPAC:633p) can testify. The recovery in trading that started in the second half of 2021 shows no sign of waning as highlighted by a 69 per cent increase in the first half order intake to £51.7m and 12 per cent higher closing order book of £62m.

Demand for Mpac’s digital solutions for artificial intelligence-enabled equipment in production facilities and warehouses is being driven by strong secular trends in its core healthcare (37 per cent of revenue), food & beverage (51 per cent) and pharmaceuticals (2 per cent) market segments. These industries are not only generating mid-single digit underlying growth rates, but the Covid-19 pandemic is accelerating the adoption of AI-enabled robotics to improve production efficiency.

Moreover, Mpac has won a major contract with New York Stock Exchange listed FYEYR Battery (FREY) to supply casting and unit cell assembly equipment for environmentally friendly lithium-ion battery cell production at its Norwegian plant. Electric vehicles and domestic storage are key end markets. FREYR plans to develop 43GWh of battery cell capacity by 2025, rising to 83GWh by 2028, making it one of Europe’s leading players. It’s not the only good news from Mpac.

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