Hi Stewart,
Duratec is one of those companies that flies under the radar with no real analyst coverage and to be frank, while we have looked at the stock in the past, we don’t know it that well. Capped at $300m, they specialise in getting more life out of structures, buildings, bridges, water infrastructure, mining assets etc. and are specialists in the protection and re-mediation of steel and concrete structures and other durability engineering services – hence the name . The company is run by Phil Harcourt, who we hear is a very good operator and has plenty of skin in the game.
Technically, the stock has pulled back in a strong uptrend and looks good for a test and possible break of the prior high, and the risk/reward ~$1.20 stacks up. Top line revenue has been growing nicely since listing in early 2020 (during the pandemic) and while earnings a more lumpy in these sorts of businesses, they’re going in the right direction. A business like this that relies so heavily on people and contracts should trade on a modest multiple, and on 12.5x for FY24e, that is the case with DUR. No doubt an interesting stock at the smaller end for us, and just on the cusp of being an option for our Emerging Companies Portfolio which needs a certain amount of liquidity.
Regarding FANGs, we are bullish on tech as we have been writing in recent notes, we think bond yields have now probably peaked in the US ands that provides a tailwind for the sector. That said, each of the FANG stocks have different things going on, so we prefer to pick the individual stock than just the ETF – NVIDIA’s recent (shallow) pullback has caught our attention in the space.
