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I have spare cash to invest this month, FTSE250 Add stocks to my portfolio. With the index down 20% from 18 months ago, you have plenty of options.
but Volume Group (LSE: fan) caught my eye and had everything I was looking for in stock.
what does the company do?
Founded in 2002, Volution manufactures and supplies ventilation products to the residential and commercial construction markets in the UK, Europe and Australia. This includes everything from simple ventilation fans to more complex whole house ventilation systems. The company’s mission statement reads:Our aim is to sustainably provide healthy indoor air“
The company has successfully expanded into Europe and Australia with numerous bolt-on acquisitions. The group now consists of 19 leading brands spread across three regions. The UK accounts for about 38% of total sales, Europe is slightly lower at 36%, and Australia accounts for most of the rest.
Most of these markets are still fragmented and ripe for further consolidation. And with Volution’s strong balance sheet, it should be able to strategically capture market share.
Yesterday, the company reported strong results for the six months ended January 31st. Earnings increased 8.5% year-on-year to £162.3m and adjusted operating profit increased 7.1% to £34.2m. His pre-tax profit rose nearly 6% to £22.6m. There was organic growth in all three regions.
Chief Executive Officer Ronnie George, who has been at the helm since 2012, noted that homeowners and landlords are grappling with problems with mold and condensation. Caused air quality issues. This helped the UK housing sector boost earnings by 16% in the first half.
The company posted an adjusted operating margin of 21.1%, exceeding the 20% target set by management. Also, the interim dividend he increased by 8.7% to 2.50 pence per share.of yield At a modest 1.86%, the payout doubles with a 12% growth rate over 5 years.
Looking ahead, management noted that inflation and supply chain challenges are easing. And with homeowners, landlords and tenants increasingly aware of the dangers of poorly ventilated properties, I think the future is bright for Volution.
The stock is currently trading at 17x Consensus Predicted EarningsNote that this is higher than the exponential average and may indicate a level of valuation risk. But at 394p, the share price remains 30% off the 560p price he reached in September 2021.
According to a recent report from Imperial College London, 28.6 million homes in the UK are among the most energy inefficient in Europe. They lose heat up to three times faster than the continents, so people get colder and eventually poorer.
This situation will need to be properly addressed by governments at some point, especially as households account for 30% of the UK’s total greenhouse gas emissions. Again, all of this should benefit Volution, which offers market-leading, energy-efficient residential heating systems.
Volution is closely aligned with powerful environmental, health and regulatory trends. The company is growing well, both organically and through acquisitions, with an increasing dividend supported by a strong financial position.
As a result, we are ready to hold shares in ISA for the next few years.
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