Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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Tipped here earlier this week:
Https://www.fool.co.uk/investing/2018/08/28/these-2-small-caps-could-become-dividend-champions/
"Follow the money
Manufacturer of laser-guided construction equipment Somero Enterprises (LSE: SOM) is an excellent example of the rule that boring businesses tend to make the best investments.
Over the past six years, its net profit has expanded at a rate of around 80% per annum! Thanks to this growth, shares in the company have more than quadrupled in value since mid-2013.
City analysts believe the group’s growth will slow over the next two years. Analysts have pencilled in an earnings per share (EPS) increase of just 17% for 2018 and 5% for 2019, a significant drop on the 80% per annum recorded between 2012 and 2017. Still, what Somero lacks in earnings growth, it more than makes up for in dividend potential.
The shares currently yield 3.9%, but this is expected to hit 5.5% by 2019. According to analysts, Somero’s per share payout will jump 42% by 2019. With $20m of net cash on the balance sheet, and dividend cover of 2 times (for 2017) it can easily afford this growth. And I believe it could be just the start of the company’s life as an income champion because its operating profit margin of 30% gives the firm plenty of free cash flow to play with every year. Even as growth slows, management can afford to hand more cash to shareholders.
As well as its dividend profile, shares in Somero currently trade at an attractive forward P/E of 12.5. So if you’re looking for a small-cap dividend growth play, in my opinion, this company is certainly worth a deeper look."
SOM have been tipped here:
"2 small-caps that could be millionaire makers
Ian Pierce | Tuesday, 17th July, 2018
Concrete is not a very exciting industry, and designing and selling the equipment to ensure it’s level when poured even less so. But that doesn’t matter to shareholders of Somero Enterprises (LSE: SOM), who have had excitement enough in seeing the shares rocket from 60p this time in 2013 to 397.5p today.
Judging by today’s trading update from the Florida-based firm, the current market cap of £220m could grow still grow quite a lot as its CEO reported strong overall sales growth and was bullish in saying there were “significant opportunities that lie ahead.”
This isn’t surprising given that the products have a loyal customer base among construction firms needing to ensure multi-story warehouse floors are perfectly level to allow end-use customers ranging from IKEA to Mercedes-Benz and FedEx to store millions of dollars of goods safely, efficiently and to increase automation opportunities.
From 2014 to 2017 annual revenue rose from $59.3m to $85.6m with adjusted EBITDA up from $15m to $28m over the same period. Looking ahead, I reckon there are plenty more growth opportunities as the firm’s sales in its two largest markets, the US and Europe, continue to steadily rise. And with sales in these markets contributing to just $70m in revenue last year there is still clearly lots of potential in the multi-billion-dollar construction markets on both sides of the Atlantic.
And while Somero’s operations in the massive Chinese market are taking time to take off, there is certainly great potential here in the long term, as well as from its constant development of new machines that has helped it into markets such as that for working on high rise buildings. With a valuation of just 16 times trailing earnings while kicking off a 3.47% dividend yield, Somero is not exactly priced like the high-growth company it is, although this isn’t a shock given its reliance on the cyclical construction industry.
Considering its growth prospects in developed and developing countries, alongside its conservative net cash position, hefty dividend and undemanding valuation, I reckon the stock could continue to generate huge returns for investors if the global economy continues to kick on."
That's a very good H1 trading update, setting SOM up nicely for the rest of the year.
The two core markets are trading strongly. In particular, for SOM to state so clearly already that expectations for the rest of the year are good shows their confidence. It wouldn't surprise me on that basis if we get an "ahead of expectations" statement for the year end.
And considering SOM's usually understated approach, this paragraph is extremely interesting:
"we are truly excited about the significant opportunities for Somero that lie ahead derived from our continued investment in new product development, a key element to our long-term growth strategy."
Not sure what has caused this slide but it's a good opportunity to buy the dip and top up!
I note Ashtead produced good results yesterday, with its Sunbelt division (the relevant comparator for SOM) being exceptionally positive:
"Sunbelt US's revenue growth continues to benefit from cyclical and structural trends "
Also, on the Somero website they provide a link to the Portland Cement forecast USA, which gives a good indication to construction activity in the USA and which Somero values as relevant to their sector.
68% of revenues are still from the US.
hTTps://investors.somero.com/news/regulatory-news
hTTp://www.cement.org/economics/forecasts
US Forecast - Spring 2018
The economy is strong. The performance of the job market and real GDP growth that has materialized over the past several months signals stronger near-term growth momentum. This momentum is reinforced by a supportive fiscal policy in the form of the relaxation of some federal spending caps, and the likely additions to infrastructure spending contained in the budget."
The outlook statement was also very confident.
Hopefully all this bodes well for SOM too.
Https://www.aol.co.uk/news/2018/06/11/2-small-cap-dividend-stocks-that-could-smash-the-footsie-this-ye/ "Super flat, super profits Construction equipment firm Somero Enterprises (LSE: SOM) makes machines which lay perfectly level concrete floors for large buildings. The market for this type of floor is big and it's growing. As well as warehouses and factories, the company is now developing new machines for concrete levelling in high-rise buildings. In a trading statement today, the firm confirmed that performance so far this year is "ahead of the comparable prior year period" and that full-year results should be in line with market forecasts. Why I'd buy this business Somero is the leader in this sector in the US and a number of other markets. As well as designing, selling and servicing its screed-levelling machines, it provides training and support to customers. The whole package forms a premium offering in a market where the cost of failure is very high. In my view, this firm's customers are unlikely to switch to cheaper rivals, because the risks would outweigh any modest savings. This is also an extremely well-run company. After entering the financial crisis with too much debt, Somero's long-serving management team has learned its lesson and built a net cash buffer that should enable it to ride out a market downturn without any drama. This process has been made easier by the group's high profit margins and strong cash generation. Last year saw the firm generate an operating margin of 30% on sales of $85m. Net cash was largely unchanged at $19m, despite $13.9m of dividend payments in 2017. Looking ahead, the stock trades on 14.5 times 2018 forecast earnings, with a prospective yield of 2.2%. If the performance remains strong, I think there's a good chance this payout could be boosted by a special dividend. Although the group is exposed to cyclical risks in the US construction market, I'd keep buying after today's news."
Very pleasing AGM statement, with everything going smoothly and ahead of last year. And unlike last year, every region and every product category is contributing well. Great to see the encouragement of participation in the AGM via webcast too. The conclusion is nicely confident: "In summary, the Company feels comfortable with the positive trading environment across our footprint, and the growth opportunities visible in North America, Europe, China, Middle East, Latin America and our Rest of World territories. This constructive environment combined with solid margin performance and healthy operating cash flow generation means the Company's trading to date is ahead of the comparable prior year period and in-line with market expectations for the full year ending 31 December 2018."
Newly tipped here: Https://www.fool.co.uk/investing/2018/06/06/2-dividend-paying-small-caps-with-market-beating-growth-potential/ "Profits surge Since mid-2014, shares in construction equipment group Somero Enterprises (LSE: SOM) have produced a return of 525% for investors, excluding dividends. This means the stock has beaten the FTSE 250 by a staggering 470% over the same period. Surging profit is the reason why the company has been able to produce such impressive gains for investors. Since 2012, net profit has jumped a staggering 1,740% from $1m to $18m, a rate of around 80% per annum according to my figures. Unfortunately, growth is expected to cool this year. Analysts have pencilled in earnings growth of 14% for the year ending 31 December. Still, in my opinion, the shares continue to offer value for investors. The stock trades at a forward P/E of 14.4 that�s excluding cash on the balance sheet of $19m (�14m). Cash generation is one of Somero�s best qualities. Despite $14m of dividend payments in 2017, its cash balance only declined $1m for the year, as inflows easily covered shareholder distributions. Somero�s cash balance is worth around 24p per share according to my figures, indicating that the stock is trading at a cash-adjusted P/E of 13.7. The shares currently yield 3.6%. As the company continues to churn out cash, I believe its growth is only just getting started."
Nice mention for SOM here (I also hold XLM and WJG which are mentioned favourably) : Http://wheeliedealer.weebly.com/blog/is-there-a-wedding-weekend-charts-with-party-guests-wjg-grg-som-xlm "Somero Enterprises SOM I hold SOM and I know a lot of Readers do as well. The Chart below is showing a lovely Uptrend and I have used the ShareScope �Toggle the Trendlines� Button to put those Lines in. SOM made a new All Time High last Week and this is Bullish Behaviour. With an AGM on Tuesday 12th June I am expecting SOM to keep moving higher in the run up to that - �Better to Travel than to Arrive� and all that. On a Forward P/E of 14 and a Forward Divvy of 4.7% it still looks cheap to me (Note, I have taken the Forecast Numbers from ShareScope of 40 Cents EPS and 27 Cents for the Dividend for 2019 and converted them into Pounds/Pence using 1.35 as the Exchange Rate)."
It's been reported that Kroger's new contract with Ocado to use their technology implies a nationwide rollout across the USA of e-commerce warehouses furnished with advanced robotics, with substantial capital spending. This is a very good indication of where the world is heading - and why SOM's products, which are globally dominant for this type of warehousing, are so in demand.
Great to see new highs here - the AGM statement is less than a month away now.
I had the same problem with XL Media who also pay their dividends in dollars.Iii response was if in a isa they automatically convert into sterling but in a trading account they pay in dollars then you have to convert them into sterling no doubt at a exchange rate in their favour!!
I found my SOM divi listed in my cash account under an entirely seperate USD, rather than GBP section. Now can't seem to get it moved / converted. This is a trading account with iii. Have asked their admin about how to get out of this pickle....
A sudden burst of buying this morning, with the latest at 410p, and almost at new highs. Sosopodgy, surely take it up with iWeb first. Many brokers have troubles with "overseas" companies' dividends - each of them seem to handle these matters differently.
Just notice that iWEB had not paid the recent SOM dividends into my ISA a/c. When challenged (on iWEB's LiveChat today) I was informed that iWEB had not received a dividend cheque to distribute to clients. Sounds fishy or not? Whereas iii had already paid my SOM divi on 23-April. Does FSA need to be informed about this delay by iWEB?
The IC have just today published their annual review of the AIM 100, their guide to the junior market. SOM are a Buy: Https://www.investorschronicle.co.uk/shares/2018/04/20/the-aim-100-2018-90-to-81/ "89. Somero Enterprises High-tech concrete levelling might not sound like the most fascinating specialism, but Somero Enterprises (SOM) is proving just how lucrative this industry can be. Last year�s performance took Somero ever closer to its $90m sales target for 2018. And the company now targets a net cash balance of at least $15m, with plans to distribute 50 per cent of excess cash as a special dividend. Where could future growth lie? Europe has enjoyed excellent revenue momentum, and the equipment fleet here may be due for technological upgrades, possibly engendering new opportunities. Meanwhile, bosses have identified a serious addressable market in China and also plan to focus on wider international expansion, along with new product development. At 395p, Somero trades on a multiple of 15 times broker FinnCap�s forecast adjusted EPS for 2018. More demanding than when we tipped the company (279p, 28 Dec 2017), but supported by compound annual revenue growth of 17 per cent from 2013 to 2017, and the attractive prospect of supplementary dividends. Buy."
SOM have been purchased (again) by the AIM sustainable dividends portfolio: http://www.proactiveinvestors.co.uk/columns/stockpot/29584/the-aim-sustainable-dividends-portfolio-gets-the-kettle-on-29584.html
Up again in the afternoon yesterday for a second day in a row - that's a 27.5p rise in 2 days. Interesting to see if it happens again this afternoon, which would strongly suggest American buying.
SOM set a record for the world's levellest floors :o)) Https://www.forconstructionpros.com/concrete/equipment-products/screeds/product/20999415/somero-enterprises-somero-s22-ez "Somero Enterprises April 4, 2018 "The Industry's Best! Proof - for 2017 the S-22 won 3 Golden Trowel Awards and set a world record for the levelest floors in the world! Also industry leading production rates, unsurpassed power, features, and maneuverability. New for 2018: EZ Clean Head, compartment layout, convenience items, improved ergonomics. With so many exclusives, the S-22EZ options platform allows you to build the machine the way you want to meet your needs."
Thanks, Rivaldo. It may seem lonely out there but we are listening! :) Glad I bought.
Secondly from Glaws2: "I went to a management presentation yesterday - some feedback from that : � Tax rate reduced to 28% for year (from 33%)will reduce to 21% going forward � Main US trade (selling) show (World of Concrete in Las Vegas in Jan) busiest they have encountered in a decade. All customer feedback from both US and Europe is that the market is very strong and continues from the 2017 H2 strength. � See signs of growth in Middle East, Latin America and ROW � India a particular growth area � sales grew from $100k in 2016 to $745k in 2017; now have 3 people in country. Generally small scale projects, lack of infrastructure means large warehouses can�t be supported. � China expected to grow (up until now demand has been generated by multi-nationals demanding quality in the country) � are increasingly hopeful that local operatives will now buy. My gut feel � don�t see that there will be much growth here) Have been developing a machine to screed in Structural High Rise sector. Concept developed after meeting with concrete contractors identified need. This opporutinty has � New market for Somero � Different customer base � No competiton � Have not been able to quantify the market � only establish a need � Prototypes developed � been working on this for 12 months now � Expected to go into production in Q4 2019 with first revenues in 2020. In summary - management were very bullish."
elsewhere from Glaws2 and rhomboid, which I hope they won't mind me posting here. The new high rise machine sounds very exciting. I love SOM's caution and work in ensuring that the demand is out there. Firstly from rhomboid: ""I attended the same presentation but your summary is better than mine would have been , some additional points 1) they mentioned U.K. was growing strongly, one customer Stanford flooring had just ordered $1.2m of equipment.. this is them; httP://www.theconstructionindex.co.uk/news/view/buy-out-at-stanford-flooring I was intrigued to see how credit worthy these customers were so pulled the accounts and was amazed to see they have c 40 staff but make over �5m a year profit which is v reassuring in the context of Somero enjoying v high margins, it seems everyone at the top end of the concrete flooring market may be doing the same! Secondly on the new high rise product I asked could it be Somero2 ie a similar size market to the one Somero addressed with their current products back in the day. Howard as the main sales guy was nodding his head vigorously..before Jack could utter slightly more cautious but still bullish statements.. Thirdly to ensure the new product was what the market wanted they got a panel together of some industry experts over 2 days, that feedback is informing the product design, they may need some modest bought in additional engineering expertise to get it to market, they�ve already had prototypes out at work. In terms of the market size my take is they didn�t see the need to scope it accurately as they were in no doubt it was big enough to get excited about. Fourthly , they have a v flexible make to order assembly operation and they�ve never been unable to deliver in a timely fashion, because they�ve high margins they�re happy to keep inventory high to facilitate this. Finally all their products (inc the new high rise) are expected to deliver similar margins. I came away v happy with my (sizeable) holding."
Tipped as a Buy in today's Shares Magazine: "SHARES IN CONCRETE levelling specialist Somero Enterprises (SOM:AIM) hit an all-time high of 379p following the publication of its full year results on 14 March. The 2017 numbers were very impressive with pre-tax profit up 21% to $25.7m, a 40% increase in the ordinary dividend, the declaration of a special dividend and the continuation of a debt-free balance sheet. The company tells Shares that the performance was down to the sales team capturing business opportunities, good execution and positive market conditions. As well as winning new business, existing customers are either buying more equipment from Somero to expand their fleet or upgrading old kit with new technology � the latter particularly the case in Europe. Approximately 15% of revenue comes from sales of spare parts and components. Product development continues to be very important. For example, it is looking to engineer solutions to place concentrate on multiple stories of high-rise properties. SHARES SAYS:  This is a well-run business generating significant value for shareholders. China is the only weak part of Somero where operations have been below the board�s expectations. It continues to believe there is a bigger opportunity in this part of Asia. We remain fans of the business and still rate the shares as a �buy� despite recent share price strength."
New highs tonight, with a nice close aided by a late �6k buy at 390p. Hopefully the start of a further re-rating.
Nice tip for SOM: Https://www.fool.co.uk/investing/2018/03/14/why-id-avoid-versarien-plc-and-buy-this-superstock-instead/ "Why I�d avoid Versarien plc and buy this superstock instead Kevin Godbold | Wednesday, 14th March, 2018 Laser-guided equipment manufacturer Somero Enterprises (LSE: SOM) has done it again, delivering robust full-year results today that demonstrate the kind of operational growth that we�ve become used to from the firm. Revenue lifted 8% during 2017, diluted earnings per share rose 15% and cash flow from operations went up 16%. The directors expressed their confidence in the outlook by pushing up the total ordinary dividend for the year by 40% to 15.5 US cents and by announcing a special dividend of 3.6 US cents � tasty! Financial strength from a well-defended niche One of the things I like about the company is its debt-free balance sheet. At the end of the trading year, the firm had $19m of free cash and chief executive Jack Cooney said it is �financially stronger than ever and well positioned to capture growth across our broad global footprint.� The company looks set to achieve its target of $90m revenue in 2018, an increase of around 5% on the figure for 2017, which City analysts think will drive up earnings by around 30%. The company�s niche in the concrete-levelling equipment business drives its progress. As well as supplying the equipment to construction firms, Somero also delivers training, education and support to customers in more than 90 countries. The firm�s technology enables its customers to install high-quality horizontal concrete floors �faster, flatter and with fewer people.� Judging by the numbers, I think it enjoys an economic moat in the industry. The company pioneered the Laser Screed market in 1986 and maintains its market-leading position by focusing on research and development to introduce new products with patent-protected proprietary designs and top-notch customer support following initial sales. At today�s share price around 377p, you can pick up some of the shares on a forward P/E ratio of just under 10 for 2018, and the forward dividend yield sits at 3.2%. There�s bound to be an element of cyclicality in the business, but no sign of trading weakness at the moment. On that basis, I think the valuation looks reasonable. and I�d rather buy the stock than graphene technology-focused Versarien (LSE: VRS)."