Tristel (TSTL:AIM) 427p

Loss to date: 12.9%

Original entry point: Buy at 490p, 27 February 2020

It’s not often you see shares in a company fall on a statement that says full-year results will be ahead of market expectations. Sadly that is what happened with infection prevention specialist Tristel (TSTL:AIM) which dropped nearly 10% on 22 July after publishing what initially looked like a very bullish trading update.

Tristel said for the 12 months to 30 June 2020 it expects to report a 21% increase in both sales and adjusted pre-tax profit. It said the business has no debt, and cash at the end of the recent financial year was £6.2 million (2019: £4.2 million). The small cap also said it would keep paying dividends.

Normally such messages would have been welcomed with open arms by the market. So why did its shares fall?

Travel restrictions to the US have delayed the appraisal of a product for the North American market. It has also seen a decline in the use of its medical device decontamination products as hospitals postponed non-critical patient appointments. Uncertainty over when hospitals will see more normal levels of activity is a negative from the market’s perspective.

FinnCap forecasts pre-tax profit of £7 million and 6.5p dividend for the year to June 2021.

SHARES SAYS: Don’t be put off by the recent pullback in the shares. Tristel is a long-term winner from increased disinfection usage. Keep buying.

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