There has been a raft of positive newsflow from companies in my 2023 Bargain Shares Portfolio.
Chip designer and maker CML Microsystems (CML: 545p) has just been granted planning permission at its 29-acre site located at Oval Park, Maldon. Last autumn, the group signed contracts (contingent on planning permission being granted on 13 acres of surplus land) with Maldon Crystal Salt and Tecniq, a designer of engineered, high-value products for high-end cars, to relocate to the site, thus providing the cornerstone of the development of Oval Park. The planning news has been well received; shares in the £86mn market capitalisation company have now kicked on 10 per cent on my entry level in this year’s portfolio.
However, they are still only rated on a cash-adjusted price/earnings (PE) ratio of 13 for the 12 months to 31 March 2024, after factoring in a 143p-a-share net cash pile and the likely windfall from the land at Oval Park. Importantly, the rerating should have further to run, especially as we can expect further robust trading updates for the 2023 financial year, and beyond, driven by the secular organic growth drivers of CML’s business. These include increasing demand for data to be transmitted faster and securely, the upgrading of telecoms infrastructure, and growing demand for commercial wireless networks for voice and data communications. Buy.