Norcros (LSE:NXR) just jumped right to the highest of my picks for the simplest shares to shop for now. The £245m market cap business supplies high-end bathroom and kitchen branded products. Most wouldn’t look out of place during a posh Kirsty and Phil makeover, like Abode sinks and taps, and Johnson ceramic tiles.
According to recent surveys, UK homeowners splashed out £39bn within the last 12 months on property improvements. It’s understandable, with more people performing from home and seeing upgrades they’d wish to make.
And I adore the figures I see within the Norcros back-end. net income is predicted to leap 72% from £15m to £25.8m in 2021. And yet the shares are trading on a forward P/E of but 10. So there’s value plus growth potential here.
Bosses have continually improved the company’s profitability over the past few years. Return on capital nearly doubled from 6.8% in 2020 to 12% in 2021. This demonstrated it’s a well-managed business.
Some of the country’s richest investors seem to agree these are the simplest shares to shop for now. Premier Asset Management, the company’s largest institutional shareholder, upped its stake by 773,000 shares on 16 June. It now holds quite 11% of the business.
There are a couple of dampeners to think about . It’s not all sunshine and roses, and as an investor, i want to stay a relaxed head and not get overexcited. Group revenue for the year to 31 March 2021 dipped around 5%, to £342m. And Norcros’s South African arm pulled during a slightly lower percentage of the group’s revenue this year than the year before.
“Group revenue outside the united kingdom has decreased within the year to 41.6%, reflecting the impact of Sterling strengthening relative to the Rand,” Norcross said.
South African currency markets have experienced significant volatility over the past 12 months. And as local business reporters note, that made it bad news for anyone moving funds out of the country.
But looking further ahead, I can see Norcros expects its revenues to stay growing, along side those tasty net profits. And earnings per share (EPS) are forecast to leap from 22.4p to 31.5p next year. That 30% EPS hike comes at an honest value. Price-to-earnings growth stands at but 0.5. Anything under 1 is usually considered a superb value.