Companies: AI.    HAMP    UMC   

Corporate Synergy has issued another insightful ‘cluster’ note, this time on a trio of smaller stocks in the resurgent aerospace sector. The stocks it has focused on are AIM-listed Aero Inventory, and fully quoted UMECO and Hampson Industries. Between them these companies have raised £170 million for acquisitions within the past six months, ‘the equivalent of another smaller sized plc’, dramatically illustrating revived City appetite for the sector.

Both UMECO and Hampson have already completed ‘earnings enhancing’ acquisitions and bolstered their reputations by delivering robust results recently. The small cap duo have also made moves into higher growth markets, modern composites in the case of UMECO and specialist automotive for Hampson.

Although Aero Inventory has yet to announce any deals, ‘what all three have in common’, argues the broker, ‘is that their individual growth strategies are clear and backed by strong management with focus and commitment’. Based on recent Airbus and Boeing production rates, Corporate Synergy expects to see the industry truly take off this year and ‘each of these three smaller companies has robust business models and funding, and their management teams are extremely well placed to deliver strong medium- and long-term bottom-line growth’.

Aero Inventory is a buy with a 500p target. Hampson, currently priced at 168.25p, merits an accumulate recommendation, with the 12-month target price raised from 185p to 200p. No recommendation was issued for high flying UMECO.