MIDAS SHARE TIPS: Concurrent Technologies is the cool technology company that is firing on all cylinders

America is worried. Top officials describe conditions in the Middle East as the most dangerous they have seen in at least fifty years, with troops under attack across the region, international ships repeatedly attacked in the Red Sea, and – last week – the death of three American soldiers. staff in Jordan.

The White House is not alone in its concerns. War in Ukraine, hostilities in Gaza, increased aggression from China – all point to a world that seems more feverish than it has been in decades.

And that puts pressure on politicians to respond to tough questions from the public. Does the armed forces have sufficient manpower? Are they supported by the latest equipment? Can they defend our country and our values?

More and more people believe that this is not an environment for cutting back and saving on defense. And while debates continue here and abroad, the sentiment among governments is clear: the latest technology is essential to protect military personnel and others from hostile aggressors.

Based in Colchester Concurrent technologies is neatly positioned to support these efforts. Founded in 1985, the company specializes in computing products for harsh and rugged environments, where resilience and quality are critical.

For years, Concurrent mainly worked with telecom companies. Recently, however, the company has shifted its focus to defense, which now accounts for about 70 percent of sales.

Competitor shares are priced at 86p and should rise significantly higher in the coming years as chief executive Miles Adcock has ambitious growth plans and a keen sense of how to deliver them. When Adcock arrived in 2021, Concurrent was in a bit of a state. The managers had been on the job for decades, product development was slow, and sales efforts were mediocre. Adcock took the bull by the horns and got to work.

With decades of experience at defense companies including BAE Systems and QinetiQ, he recognized that the core business had great potential, but that it needed more energy, more focus and more grit.

Dozens of vintage cars left, but new recruits came in, including many engineers and other specialists who had worked with Adcock in the past. Within a few months a culture change took place and today the company is running at full speed.

Last month, Adcock revealed that 2023 sales and profits would be higher than forecast, with sales on track to rise more than 60 percent to £31 million. Profits were hit in 2022 by an ongoing shortage of crucial supplies, but they recovered last year and brokers now expect profits to rise from £400,000 to £3.6m.

The order pipeline is also healthy. Concurrent supplies the Ministry of Defense, the US Department of Defense and armed forces in countries such as India, Malaysia and South Korea.

Bidding for new contracts is highly competitive, with different companies being asked to submit ideas when a new part is needed. Military departments are not only looking for high-quality, cutting-edge ideas, they also need to know that winning bidders can deliver and maintain the goods on time if something goes wrong.

Rival contractors are often significantly larger than Competitor and the company normally wins one or two bids per year. Last year Adcock and his team won eight and they hope to do even better in 2024. Deals normally provide a small initial boost in sales, but momentum is built over years and each contract can last a decade or more.

War zone: The company’s equipment helps soldiers communicate

That gives Adcock reason for optimism. He hopes to more than triple turnover to £100m in the coming years, with profits rising in sync. Highly qualified engineers have been recruited, the sales force is eager to get started and the order book is top class.

Competitor is also benefiting from changes in U.S. Department of Defense procurement policy, which are encouraging competition from smaller players. Sales in Britain are going well and increased fivefold last year to around £5 million, with more growth expected.

Adcock is also keen to add more products to Concurrent’s arsenal, having acquired a US company that specializes in aerospace systems for military and commercial applications late last year.

Midas judgment: Concurrent computers are in a different class than consumer electronics. Used in war zones and areas of extreme tension, they help soldiers, sailors and pilots detect danger, protect themselves and relay critical messages. While current economic conditions do not automatically lead to higher defense spending, they certainly focus governments’ attention – and that will likely benefit Concurrent. At 86p, the shares are a long-term buy.

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