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Marlowe (MRL:AIM) 405p
Gain to date: 30.6%
Original entry point: Buy at 310p, 23 March 2017
A 30%+ share price gain in three months is a great start for our trade on support services group Marlowe (MRL:AIM). We think there is much more to come from the fire and water services expert, particularly as it has just made an interesting acquisition and imminent full year results could remind the market of its achievements and future potential.
As a reminder, Marlowe is buying small businesses that serve heavily-regulated markets. Its activities include checking fire detection and fire alarm systems, as well as making sure hotels and offices have clean water.
It had £2.7m net cash as of 31 March 2017. A month later Marlowe increased it debt facility by £5m to £17.5m, giving it greater firepower to make acquisitions.
On 16 June it paid £1.9m for Advance Environmental which provides water treatment and hygiene services to sectors including healthcare, education and leisure.
Full year results are expected to be published at the end of June. We expect an update from the company on how it is managing to increase operating margins across its acquired businesses.
Keep buying at 405p.
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