Northern Bear - 91.5p

Northern Bear was incorporated in 2006 to acquire mature, owner-managed businesses in the building services and materials industry which are based in the North East of England and the company joined AIM in the same year.

Following the recent acquisition of A1 Trucks, a forklift operator and McGoughs, a plumbing and heating specialist, the group now comprises 12 businesses. These include:- a provider of fire protection and noise reduction services, roofing specialists, a residential and commercial property refurbishment company and a surveyer of premises for the presence of asbestos which provides plans for its control and disposal.

The interim results, covering the six months to September 30, were in line with management expectations and contributions from acquisitions helped turnover rise to £13.7m (2006: £4.8m), whilst profit before tax increased to £1m. Basic earnings per share for the period came in at 5.1p (2006: 0.5p) and a maiden interim dividend of 1p declared, with this being 12 months ahead of initial expectations, reflecting the strong progress made by the group. The period saw further acquisitions being made and the board of directors was also strengthened.

Northern Bear has made excellent progress since joining AIM and the company looks set to deliver strong earnings growth for the foreseeable future.

Given the uncertainty currently prevailing in the market, vendors of businesses have become more realistic with selling prices and this has allowed Northern Bear to make acquisitions easily. The low prospective p/e ratio is supported by a solid yield and so we rate the shares as a BUY.

  • Those of you who are avid readers of this column may remember Straight Plc, a company my colleague Chris Bragg wrote about in January. The Leeds-based recycling container supplier was mentioned last August and at that time we warned that the shares could be weak. That proved to be an understatement as the shares halved in value. In January the price slipped to a seemingly undervalued 71.5p and since then they have recovered slightly and are currently 81.5p. However, they still look good value even if the price may be volatile in the near term.

WARNING: Opinions expressed are the writers' judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice.