look from iii11 Mar 2016 19:21
Does a flat stock price in response to strong results and a confident outlook imply cyclicals represent good value, or a warning of inevitable downturn? It's a curiosity of sentiment, like the way miners, oil and related service stocks have risen hugely off February lows, while other cyclicals are mired despite a lower risk profile and healthy underlying progress.
A prime example is mid-cap car dealer Lookers (LOOK), which has declared a seventh year of profits growth in 2015, with revenue up 20% to £3.65 billion.
As one of the principal UK motor retail and after-sales groups, it reckons new car sales will continue to grow, and the expanded stock of vehicles under three years old will also benefit the used car market, hence aftersales (services/parts) also.
Yet, at 163p, the stock remains down 12% from its 185p high last autumn, having sold off to 146p in the rout earlier this year. Clearly, the market is wary to discount further significant growth in what, at first sight, appears a lengthy upturn.