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magazineClipper continues to ride online wave
Clipper Logistics (CLG) 420.2p
Gain to date: 36.9%
Original entry point: 307p, 1 September 2016
Our bullish call on Clipper Logistics (CLG) is now a tidy 36.9% in the money. Geared into the growth of online shopping, the fashion logistics specialist runs warehouses and delivery services for retailers, sending out clothes ordered via websites and handling returns.
Its ‘sticky’ customers include ASOS (ASC:AIM), John Lewis, Sainsbury’s (SBRY), SuperGroup (SGP) and Halfords (HFD); Clipper recently signed (3 May) a new eight-year contract with the latter and also counts British American Tobacco (BATS) as a customer.
Clipper’s high-flying shares were helped higher by upgrades following the acquisition (25 May) of Tesam. Buying this smaller, Peterborough-based peer ‘provides additional capacity, at an attractive location, at an attractive price, and enhances the ability of the group to implement its strong pipeline of new business’, according to Numis Securities.
For the year to April 2018, the broker has upgraded its pre-tax profit forecast from £18.4m to £20m. Based on estimated earnings of 15.3p, Clipper isn’t cheap on a prospective PE of 27.5 times, although we think its structural growth story and strong cash generation justify a premium rating.
Keep buying high-quality Clipper at 420.2p. (JC)
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