One to watch: Rotork

Published on Monday 13 October 2008 21:53

840p +2p Scotsman says HOLD

ROTORK is a UK holding company that makes actuators and related specialist engineering equipment including gearboxes.

Actuators are highly specialist devices designed to switch valves on and off. They have wide applications particularly in the energy and water industries. Rotork is a world leader accounting for, by its own estimates, about a quarter of the 850 million international sales last year.

Rotork's products are highly sophisticated, many designed to operate automatically and near instantaneously in the event of some form of industrial calamity.

The firm has an international profile with, on the basis of most recent figures, 44 per cent of sales in Europe, 30 per cent in North America and the balance in Asia and the Middle East.

Over the first six months of this year the company reported a near 20 per cent increase in pre-tax profits to 23m. It now has an order book of nearly 140m, up 20 per cent this year.

If not immune to the contemporary international financial turmoil, its involvement in what might be described as "core industries" such as energy, power and water, leaves the business model solid.

The shares do stand on a fairly high valuation, a p/e of about 16 and offering a yield of some 3 per cent. On the face of it this does not appear a particularly compelling valuation.

Nevertheless, sanity will return to the international stock market eventually and Rotork, with its shares down nearly a third from its 2008 peak, looks to have appeal given the prospects within its core industrial markets.

&#149 The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.