Companies: CNC   

In the current climate, businesses robust of balance sheet, strongly cash generative and growing profits fast should be on investors’ radars. One such company is Concurrent Technologies, the maker of high-end ‘embedded’ computer products sold into sectors including defence and telecommunications, both demonstrating resilience amid the economic downturn.

Covering a range of central processing unit (CPU) boards and computer systems, Concurrent’s rugged products typically require low levels of electrical power, yet deliver substantial processing power and can be used in extreme temperature environments. As such, they are in great demand both in Europe and the US.

Concurrent’s interim figures to June were eye-catching, showing pre-tax profits increased by 45% to over £1.2m, on sales up 15% to £5.48m, with earnings soaring 48% higher to 1.27p and the dividend lifted to 0.45p (2007: 0.4p). Expanded gross margins of 54% (2007: 47%) reflected a trend towards higher-margin products, while the company closed the half with zero borrowings and £3.9m cash, down from £4.3m year on year, partly due to the group’s investment in a new engineering design facility in India.

Driving the group’s excellent performance is ongoing good demand from defence customers, and while the cash-rich company continues to scout for acquisitive deals, lower-risk organic growth remains the focus. Concurrent, profiled by Growth Company Investor at 30.25p in 2006, remains a good value income and growth stock. Buy/hold.

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Concurrent Technologies	AIM	£22.55m	31.50p	4.25p
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