Aggreko PLC (AGK)

For a long term share purchase AGK is worthy of consideration. They provide electricity generators for temporary power and temperature control solutions. Operating in about 100 countries with 194 service centres and offices in 47 countries. From their last report, military contracts reducing but indicating higher profits in the 2nd half of year. Presently graded hold by many analysts. They have an impressive board, soon to include the former CEO of SSE plc. From a high of £24 last year, they have dropped to, presently, about £15 – matching a previous low in 2011. We feel that they are about 25% of their future value if they can maintain growth which, to-date, has been excellent.  They have an acceptable amount of debt, however, their spend on assets has been high and consequently their cash-flow-growth has reduced. Last years profit margin was 24% and their first 6 months of this year they are reporting a profit margin of 19%. Depreciation slightly high at 31%, but probably not unusual for a company such as this. In terms of gross margin and spend on wages and admin the percentages indicate a well managed company. Importantly their treasury shares purchases,  or share buy back, will help to increase share price long term. Overall, an opportunity to buy a wonderful company at a discount price. In the short term, however, price is still trending down. So buy cautiously.  If it continues down further, it provides another buying opportunity. Again, this is a purchase for the longer term buyer, not, we would recommend, for the slowtrader spread better. At least not until the share is trending up in the medium term.


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