MIDAS STOCK TIPS: Your money can fly with engineering specialist Amcomri

British industry once led the world and our stock market dominated global financial markets.

The mood has been slightly less triumphant in recent years. The industry represents less than 10 percent of our economy, UK shares are widely shunned and the junior Aim market has suffered more than most.

All this makes the IPO of a specialized engineering firm Amcomri particularly exciting.

Amcomri, founded by seasoned business experts Paul McGowan and Hugh Whitcomb, joined Aim just before Christmas at 55p per share. The share has risen to 59p and should continue to rise in value in 2025 and beyond.

Amcomri buys engineering and production companies whose owners are nearing retirement. Thousands of these businesses are spread across the country and are run by dedicated entrepreneurs who have spent years building their businesses and want to ensure they continue to thrive.

Amcomri seeks out these companies and helps them transition to a new owner as their founders move on to a life beyond the corporate world.

The results so far demonstrate the benefits of this strategy. McGowan and Whitcomb started working in the area in 2016, founded Amcomri in 2020 and now own twelve thriving companies.

Its activities are broad but all highly specialized and benefit from long-standing customer relationships and contracts with companies such as defense giant BAE Systems, nuclear energy group EDF Energy and the London Underground.

For example, Oldham-based TP Matrix replaces outdated electronic components in trains, such as components that ensure doors open and close when passengers press specific buttons.

Railway regulations require this kit to be updated regularly and TP Matrix helps with that.

Under Amcomri’s tutelage, the company is growing, winning customers from train operators and their suppliers and helping the rolling stock last longer.

In Swansea, Amcomri-owned IVS is working with Dragon LNG, which imports liquefied natural gas from around the world.

This liquefied gas, which is responsible for a significant portion of the UK’s energy demand, is pumped from ships into specialist storage tanks so it can be converted into residential and commercial use.

The process is complex and safety is crucial. IVS maintains the valves that ensure tanks are safe and standards are maintained. Once again, the company has grown significantly under Amcomri’s leadership.

In the same vein, Spiral Weld overhauls and repairs 10-ton cooling water valves for nuclear power plants, while Kestrel Valve is active in the field of renewable energy.

On the manufacturing side, Claro Precision Engineering makes hinges for Airbus aircraft and Premier Limpet makes high-quality printed tape used in packages and packaging.

The portfolio is broad, but the emphasis is on improving sales and profits by acquiring new customers, selling more to existing customers and streamlining processes so that companies become more efficient.

Recent figures are encouraging. In 2021, group revenues were approximately £27.3 million. By 2023, sales had increased to £47m, with underlying profits more than doubling from £2.7m to £5.8m.

More of the same is expected from the past year, the next twelve months and beyond.

McGowan and Whitcomb lead a small team, but it consists of industry, financial and management specialists, whose combined experience and expertise help companies grow.

The group plans to acquire two or three new companies per year and the field is huge, allowing Amcomri to be very selective. Initially, most introductions came from regional accountants.

Today, McGowan and Whitcomb are increasingly recommended by owners who have seen firsthand what the pair can do.

The group is also benefiting from a subtle shift in British industry, as major British companies look to local suppliers they can trust to deliver top quality goods, work quickly and provide regular, reliable services.

Covid-19 and the war in Ukraine have highlighted the risks associated with over-reliance on foreign suppliers. That has fueled growing enthusiasm for domestic businesses, especially in sensitive sectors such as energy and defense.

Midas judgment: Amcomri has had a strong start as a publicly traded company and deserves to continue in that spirit. Britain has a rich tech history and should also have a robust future. Amcomri helps make this possible and delivers shareholder rewards along the way. At 59p the shares are a buy.

Traded on: Goal ticker: AMCO Contact: amcomrigroup.com