As I briefly mentioned earlier, when a share rises sharply on a dullish earnings statement, then it often signifies a very interesting moment for a company's equity.
Aggreko's statement was a bit dull...but at least not negative and this undoubtedly squeezed some bears today anticipating another profit warning. Trading was 'inline with hopes' and there were a lot of references to mid single digit growth after taking account of extraordinary business opportunities for the Olympics in 2012 and the aftermath of the terrible tsunami in Japan were taken out.
In the large contracts Power Projects business, getting interest and potential pipelines to convert remains a challenge, whilst the Local business continues to do well. I liked, in the latter area, that profits and margins are both continuing to go up.
Elsewhere, the £200m+ free cash flow generation (try getting closer to £300m after the payment of the dividend) captured my attention. That's basically a 7% pre dividend free cash flow yield. Not so shabby when wrapped up within a good investment theme.
Looking back at my original investment appraisal (link here) 1500p felt like a correct 'bad day' level. Mr Market through general volatility may well provide a few more of those but this will just equate to more opportunities to augment holdings.
Thinking more generally, I think this will become the norm for successful investment over the next few years. I believe we are at the peak of passive/non-active investing fervour and hence to really outperform going forward it is all going to be about identifying good themes and underappreciated companies within them. Volatility is a friend in such circumstances.
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