Free share tips posted weekly! This week’s free AIM share tip is Northern Bear.
Shares in the AIM-listed Northern Bear (NTBR) have been drifting lower since mid-June when they reached 59p and we now feel that they are worth another look. The current share price is close to a five-year low and is now only just above the low of 47p which the shares fell to at the start of the pandemic last year. Bearing in mind the fact that the share price was 77.5p in January last year, it is clear that there is considerable upside potential if the company can regain previous levels of profitability.
Northern Bear is a group of businesses which provide specialist building services to a range of clients in the North of England. Clients include local authorities, housing associations, universities, NHS Trusts, construction companies and house builders. Each company within the group has retained its autonomy and individual identity with Northern Bear providing the additional security of being part of a larger group with the benefits this offers. There is also clearly an opportunity to cross sell services between companies within the group. Services offered by the group include building and roofing; electrical installation, maintenance and repair; fire protection and sound insulation; interior design and installation and specialist restoration and refurbishment.
The group announced its annual results for the year to 31 March on 21 July and these demonstrated a resilient performance in what have clearly been challenging trading conditions. Revenue for the year declined to £49.2m (2020: £54.4m) with the fall due to the effect of the pandemic, with adjusted pre-tax profit falling to £1.19m (2020: £1.99m). Adjusted earnings per share fell to 5.5p (2020: 8.7p) and no dividend was paid as this was not deemed appropriate. The company did make the point that it had sufficient cash resources to have paid a final dividend of 3.25p per share (as in 2019) which alone would give a dividend yield of 6.7%. The company had net cash at the year end of £2.1m (2020: £0.2m). Bearing in mind the fact the group is only capitalised at £9m, this is a relatively large sum.
As the restrictions caused by the pandemic continue to ease, the group’s recovery should gain momentum. Although there has been some disruption to the supply of building materials the group has managed to cope with these, and these conditions should hopefully ease going forward. We believe that the shares have been overlooked and put forward a free share tip recommendation of BUY.
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