Big rebound

But sometimes I see stocks lifting themselves from such depths, and I start to wonder if I’m looking at a potential bargain buy. Renold (LSE: RNO) is one that has just crossed my path.

Renold shares dipped as low as 4p in early 2020, and the company was worth very little. But since then the price has grown to 24.75p. The company is up to a £56m market-cap now. That’s still a bit marginal, but it’s more respectable.

Renold makes industrial chains and related power transmission products, and it’s been recording falling earnings for years. But results for the year ended March were headlined “Significant revenue and earnings rebound… Record order book… Continued net debt reduction“.

This is still a very small company. And it’s listed on the Alternative Investment Market (AIM), which is less regulated and generally more volatile. So I’m extra cautious. But I think it deserves closer analyisis.

Dividends too

Structural steel specialist Severfield (LSE: SFR) has seen its share price falling over the past 12 months. As I write, it stands at 57.8p.

The company saw earnings dip a little during the pandemic, but not by much. And last week, the firm put out an upbeat trading statement.

Several current contracts are “expected to deliver significant profits in H2“. And Severfield has a “UK and Europe order book which stands at £483m at 1 September“.

The biggest threat seems to be the current economic outlook. I suspect soaring inflation and rising supply chain costs are likely to impact every aspect of the construction industry.

But against that, I think Severfield’s forecast price-to-earnings (P/E) multiple of under nine looks cheap. Especially with dividend yields heading to 6% and above, based on market predictions.

Back to the shops

Hammerson (LSE: HMSO) shares have lost a third of their value over the past 12 months, dropping to 21.7p today.

The landlord invests in commercial properties, including shopping centres such as the Bullring/Grand Central in Birmingham. And just as the pandemic has eased, we now have crippling inflation, reducing the desire to go out spending.

But Hammerson did record a 154% rise in adjusted earnings in the first half, as like-for-like rental income increased 48%.

Disposals helped to get net debt down a little. It still stood at £1.7bn at 30 June though, which is a threat. Still, the company values its property portfolio at £5.3bn.

The dividend situation is a bit confusing. Hammerson declared an interim cash dividend of 0.2p per share, or an enhanced scrip dividend of 2p as an alternative. This should be the last enhanced scrip dividend alternative, so we can’t deduce much about future cash payments right now.

I’d wait to see the second half performance. But if we get back even close to pre-pandemic dividends, Hammerson could turn out to be a buy.

Rising interest rates

NatWest (LSE:NWG) shares are currently trading at 258p and they’re up 25% in the last three months.

The banking firm declared a total dividend of 16.8p on 29 July. At the time of writing, this results in a dividend yield of around 6.42%.

The company is currently benefiting from rising interest rates in the UK that are now set at 1.75%. These may only move higher, as the Bank of England seeks to control inflation, which is over 10%.

Rising interest rates generally mean that banks can charge more for loans and mortgages, so that could be good news for NatWest. 

This was visible in its results for the six months to 30 June, when the business reported higher-than-expected pre-tax profits of £2.6bn. The consensus was £2.2bn and the result for the same period in 2021 was £2.3bn.

On the flip side, rising rates may be a deterrent for future customers who don’t wish to take on more debt amid the cost-of-living crisis.

Overall though, NatWest expects full-year revenue to grow 25% compared to last year.

A return to shopping centres

Second, Hammerson (LSE:HMSO) recently declared an interim dividend of 2p per share. At the current share price of 24p, this results in a dividend yield of about 7.62%.

It’s worth noting though, that dividend policies can be subject to change in the future.

The shopping centre and real estate investment firm was battered during the pandemic and the share price slumped to just over 4p.   

For the six months to 30 June however, earnings rose by 154% to £51m. Furthermore, there was a 25% fall in net finance costs, which should place the company on a better financial footing. 

Despite this, there’s always the threat that further pandemic variants have a detrimental impact on Hammerson’s operations. In addition, online shopping may negatively affect the business.

Overall though, the group’s portfolio value increased to £5.3bn, with an annual return of 2.1%. 

Greater hiring

Finally, PageGroup (LSE:PAGE) declared an interim dividend of 31.62p per share, which equates to a dividend yield of 7.01%. At the time of writing, the shares are trading at 446p.

The recruitment consultancy firm has reported solid pre-tax profits for the past five years, while reporting a £114.5m pre-tax profit for the six months to 30 June. This was an 80% increase year on year.

Furthermore, revenue grew to £977m. These financial results give me confidence as a potential investor, but I’m always aware that past growth doesn’t necessarily indicate future growth. 

However, it cautioned about a new trend of slowing recruitment by companies as many have reduced their hiring capacity due to economic conditions. 

Despite this, the business stated that it had benefited from wage inflation, because it had received greater fees per hire on average. 

Overall, these three big dividend companies may provide interesting opportunities for income. As such, I’ll add all three to my portfolio soon.

Real estate investment trust

As a quick reminder, Hammerson is a real estate investment trust (REIT). In simpler terms, it owns and operates income-yielding real estate. It focuses on commercial properties throughout the UK and Europe and has a primary focus on value retail.

A penny stock is one that trades for less than £1. So what’s the current state of play with Hammerson shares? Well, as I write, the shares are trading for 20p. At this time last year, the shares were trading for 39p, which is a 48% drop over a 12-month period.

The bull case

An argument could be made that Hammerson shares could be a long-term recovery play. The shares are dirt-cheap at current levels. For example, the shares are currently on a price-to-earnings ratio of just 13. Furthermore, the shares are on a price-to-book ratio of just 0.4 which indicates the shares could be undervalued.

Next, REITs are designed to reward investors by paying 90% of profits back to shareholders in the form of dividends. These dividend payments could boost my passive income stream. Hammerson’s current dividend yield stands at 2%. It is worth mentioning that dividends can be cancelled at any time, however. They are underpinned by performance and are paid at the discretion of the business.

Finally, the commercial property market has bounced back since the pandemic struck. Many businesses like Hammerson struggled during the pandemic and were unable to collect rent from struggling businesses, which affected performance and returns. With restrictions a thing of the past, footfall and property demand have increased.

Why I’m avoiding this penny stock

I do understand that past performance is not a guarantee of the future. However, when I review Hammerson’s track record, it does not fill me with confidence. It has a consistent track record of losses. Furthermore, when the pandemic struck, it came close to liquidation and had to borrow to keep the lights on. With dividend payments being of the most attractive aspects of a REIT, if Hammerson is consistently recording losses, how can I expect to receive any dividends if there aren’t any profits to return to shareholders? This is not the first penny stock with a chequered past I have come across.

Next, Hammerson’s reliance on the retail sector does not sit well with me either. In recent years, the decline of bricks and mortar retailers has been well documented. This has been due to the e-commerce boom and rise in online shopping. The change in consumers’ shopping habits has not helped either and many well established and well known retailers have had to cease trading.

Overall I believe there are better penny stock options than Hammerson for my holdings. In fact, I own several REITs as part of my current holdings. They are better placed to handle risks, possess a stronger balance sheet, as well as much better performance records. Furthermore they operate in more lucrative markets, away from retail. I will not be buying Hammerson shares for my holdings currently.

However, due to the risk of investing in these smaller businesses, I am only willing to allocate a slim percentage of my portfolio to penny stocks. As such, only a few make it through the strict criteria I use to analyse opportunities.

Here are two penny stocks I would buy right now for my portfolio. 

Penny stocks to buy for growth 

The first is the commercial property company Hammerson (LSE: HMSO). This business has come close to collapse in recent years, but it has managed to keep the lights on with emergency fundraisings and asset sales. Now, as commercial property prices start to rise from pandemic levels, it looks as if the outlook for the enterprise is improving.

In a trading update issue towards the end of January, the organisation announced that adjusted earnings for its 2021 financial year would range £75m-£80m, ahead of the £60m it previously expected. It collected around 88% of rents due for the period. 

The firm has also gathered 74% of rent due in the first quarter of its 2022 financial year. 

Clearly, the business is not out of the woods yet. It is still struggling to collect rents from tenants and will likely continue to do so as the brick-and-mortar retail sector remains under pressure. It is unclear how long this challenge will last for the business and is probably the most considerable risk hanging over the stock right now. 

Still, with the outlook for the enterprise improving, I would be happy to add the shares to my portfolio of penny stocks. On top of its improving outlook, the shares also look dirt-cheap. They are trading at a price-to-book (P/B) value of 0.6. This suggests to me the market could be overlooking the potential here. 

Profit potential 

Another opportunity where it looks to me as if the market is overlooking the potential of the business is at oil producer EnQuest (LSE: ENQ). 

Even though the price of Brent Crude recently hit a multi-year high of $90 per barrel, the stock is still trading at roughly the same level it was before the pandemic began. And it is not as if the business is not benefiting from the higher oil price. Analysts believe the firm will earn $156m this year and $312m in 2022. Based on these numbers, the stock is trading at a 2022 forward price-to-earnings (P/E) ratio of 1.5. 

These numbers assume the price of oil remains high. If it does not, the company may miss these earnings expectations. This is probably the most considerable risk to my investment thesis at this point.

Nevertheless, even after factoring this risk into consideration, I think EnQuest is one of the cheapest penny stocks on the market at the moment. In my opinion, even a modest improvement in investor sentiment could lead to a significant increase in the company’s share price.

Therefore, I would be happy to add the stock to my portfolio today. 

In my search this week, I saw two penny stocks that have surged in 2022 already. Here’s what I’d do next.

Cineworld

The first company is Cineworld (LSE: CINE). The share price is 38p as I write, so it’s still firmly in penny stock territory. But the stock’s rallied almost 19% already this year. However, over one year, the stock is down a quite miserable 41%. Is the recent share price surge just a ‘dead cat bounce’?

The first thing I noticed when researching the stock is that there’s been no update on trading from the company recently. The recent share price surge can’t be explained by positive updates from Cineworld.

However, there was an update on 15 December. In it, Cineworld said it has been ordered to pay C$1.23bn in damages to Cineplex over a breach of contract. This is hugely damaging to the company as its current market value is only £521m.

But what about forecasts for this year? Cineworld is expected to grow revenue by over 100% in 2022 to £3.95bn. Earnings per share (EPS) are expected to swing from a loss back to 2.41p, which would value the shares on a price-to-earnings ratio of 21. I think this reflects the boost in demand the company might see if Covid subsides.

However, all things considered, there are too many risks here for me to want to buy the stock. Therefore, I do view the recent share price rally as a bit of a false dawn.

Hammerson

The next company is real estate investment trust (REIT) Hammerson (LSE: HMSO). Its current share price is 36p, which has popped 8.7% already in 2022. The stock’s also rallied a huge 50% over one year.

Hammerson specialises in managing and developing retail properties in the UK and mainland Europe. Unfortunately, the company suffered substantial losses during the pandemic. The retail sector was severely impacted by Covid restrictions, which reduced Hammerson’s rental income.

The company may be turning a corner though. EPS are forecast to increase by 32% this year, which is a huge turnaround from the heavy losses endured through the pandemic. Hammerson shares are also valued on a price-to-net-asset-value of only 0.6. This looks cheap to me, but it may be signalling further trouble in the retail sector due to continuing Covid restrictions.

I’m in favour of adding REITs to my portfolio for diversification though. They can also be excellent investments to grow my passive income. I do note that Hammerson has considerable debt on its balance sheet, which heightens the risk of any investment. Nevertheless, the stock looks very cheap today. I’m going to keep this on my watchlist for now to see how the retail sector recovers in the months ahead.

Hammer to fall?

Shopping centres operator Hammerson (LSE: HMSO) offers mighty all-round value today. Its 4% dividend yield for 2022 is more than  double the FTSE 250 average. Meanwhile, City predictions of a 44% earnings rebound next year leave the company trading on a forward price-to-earnings growth (PEG) ratio of 0.4.

A reading below 1 suggests a stock could be undervalued. But even this low valuation isn’t enough to encourage me to invest today. Shoppers are deserting physical retail in their droves again as the Covid-19 crisis worsens. Springboard data shows footfall at Britain’s shopping malls down a whopping 32.9% on Sunday versus two years ago. Things are bound to get even stickier for Hammerson and its retail tenants if the government tightens coronavirus restrictions too.

Turnaround plans

On the positive side, Hammerson has been making considerable progress to bring its debt mountain down. It’s raised an extra £92m thanks to the sale of six assets since the halfway point of 2021, it announced last week. That said, the amount of debt the business continues to hold is colossal. And I worry that this could push it back to the brink if shoppers stay away from its retail destinations. Hammerson had net debt of £1.9bn as of June.

The company’s drive to focus on cities with strong economic and population growth may well deliver meaty profits growth over the long term. So could its decision to move away from pure retail and towards providing a more ‘social’ experience for visitors. But this isn’t something I’m prepared to take a chance with right now.

A 5.4% dividend yield I’d rather buy

I’d much rather spend my hard-earned cash on gold-mining stock Centamin (LSE: CEY). There are plenty of reasons why I think precious metals prices could soar in 2022. First and foremost is a prolonged period of high Covid-19 infections that might derail the economic recovery. Then there’s the global inflationary bubble that analysts are tipping to worsen before it gets better. China’s sharply-cooling economy and weakening property sector are other reasons why safe-haven assets like gold could gain momentum.

I’d prefer to buy a gold-mining share like Centamin rather than snap up physical metal or invest in a gold-backed financial product like an ETF. Okay, doing this exposes me to the unpredictable nature of metals mining where production issues can have significant consequences for a company’s bottom line. But I believe the possibility of big dividends can offset this problem.

And Centamin does offer huge income opportunities for 2022 and beyond. This FTSE 250 firm has a big 5.4% dividend yield for next year. It also offers decent value from an earnings perspective, the digger trading on a forward price-to-earnings (P/E) ratio of around 12 times. This is one of the big-dividend-paying UK shares I have my eye on today.

REIT

Hammerson is a real estate investment trust (often referred to as a REIT). This means it owns, operates, or finances income generating real estate. Hammerson owns and operates commercial properties throughout the UK and across Europe including in France and Ireland. The majority of its property assets are retail.

Hammerson nearly collapsed last year in the wake of the pandemic. The recent e-commerce boom, an issue for retail prior to the pandemic, as well as restrictions and retail closures that forced many firms to close, led it to the brink of collapse. Rent collection also became tougher during the pandemic period. Recent signs from larger REITs indicate commercial property demand is on the up and rent collection seems to be back to pre-pandemic levels.

Penny stocks are those that trade for less than £1. As I write, Hammerson shares are trading for 31p per share. A year ago, shares were trading for 21p, which is a return of 47%.

For and against

FOR: Hammerson recently reported positive performance in its latest trading update at the end of October. It reported that footfall throughout its retail portfolio was approximately 15%-20% lower than pre-pandemic levels. In the UK, however, it had surpassed pre-pandemic levels. Rent collection for FY 2020 was 94% and 2021 year-to-date stood close to 80%. I am buoyed by this and think the upward trajectory in performance, footfall, and rent collection could continue.

AGAINST: I understand past performance is not a guarantee of the future but I use it as a gauge. Hammerson does not have the best track record of performance, with consistent losses reported over the past few years. Losses are usually a red flag for me. It is not uncommon to see penny stocks record losses consistently. 

FOR: A recent commercial property market survey indicates that the market as a whole is on the up. As a Foolish investor for the long term, I am not expecting huge returns overnight from my investments but should be patient to gain some returns in the longer term. Hammerson is in a good position to benefit from any upward trajectory in the market. It has a good footprint throughout several countries. Also, pent up demand to get out and shop after the pandemic and restrictions should boost footfall.

AGAINST: Hammerson faces some major competition and there are other REITs out there that possess a larger footprint and have more diversified property portfolios. Two that come to mind are British Land and Landsec. The retail-rich nature of Hammerson’s portfolio does not fill me with confidence. The threat of further restrictions, especially after another new variant of the virus has the world on alert, is not a good sign for retail outlets.

Better penny stock options

After carefully reviewing the options I would not add Hammerson shares to my portfolio right now. Its track record does not fill me with confidence and loss-making firms are ones I usually avoid. In addition to this, the future of retail due to the pandemic and e-commerce boom is too uncertain for my liking. I believe there are better penny stock options out there for me that will offer me more consistent and generous returns.

I think a diverse portfolio of smaller companies would fit nicely alongside these investments and provide exposure to potentially faster-growing enterprises.

As the UK economy wakes up from the pandemic, I would like more exposure to these smaller firms. Especially domestic businesses, which will benefit from the UK’s economic recovery. 

Penny stocks: risks 

However, investing in penny stocks can be risky. While these companies can generate higher returns than their blue-chip peers, they can also produce losses for shareholders.

In fact, these smaller companies are much more likely to fail because they may lack the checks and balances that are in place at larger enterprises. They may also struggle to access financing during periods of economic stress. 

Still, I am comfortable with the risks of buying these smaller businesses. And with that in mind, here is a selection of penny stocks I would acquire with a lump sum of £10,000 today. 

Growth potential 

The first company on my list is Hammerson (LSE: HMSO). This company which owns a portfolio of commercial property assets across the UK, predominantly in the retail space, almost collapsed last year. 

During the pandemic, retailers across the country were forced to close, and landlords were prevented from evicting tenants who declined to pay their rent. This hit commercial property owners particularly hard.

The sector was already struggling with the rise of e-commerce before the pandemic and declining occupancy as well as rent levels. Not only has the pandemic caused significant financial stress across the retail industry, but it has also accelerated the shift towards e-commerce. 

The good news is, it appears that these trends are starting to dissipate. According to recent trading updates from Hammerson’s larger peers, Britsh Land and Landsec, there is a healthy level of interest in commercial property from institutional investors, pushing up property values. Levels of rent collection have also returned to near pre-pandemic rates. 

Footfall recovery 

Hammerson’s latest trading update (published at the end of October) showed that footfall to the company’s retail properties was around 15% to 20% below 2019 levels in September on October. On the key August bank holiday weekend, footfall even exceeded 2019 levels. Rent collection rates have also improved to around 70%. 

Of course, there is a risk that this trend could go into reverse. Further coronavirus restrictions, or an economic slump, could hurt consumer demand. This is probably the most considerable risk the group faces right now. It is impossible for me to say how additional coronavirus restrictions would impact Hammerson’s recovery. 

Considering the recent updates from Britsh Land and Landsec, I think Hammerson’s trading performance has continued to improve. That is why I would acquire the firm for my portfolio of penny stocks today. 

Booming market 

Alongside retail landlord Hammerson, I would also acquire Pendragon (LSE: PDG) for my portfolio. 

The automotive retailer has faced significant headwinds over the past two years, but it is currently riding the tailwinds of a booming second-hand car market. 

Due to the limited supply of new vehicles, a side effect of the global supply chain crisis, demand for second-hand cars has exploded. This is a great operating environment for companies like Pendragon, which specialises in second-hand and new vehicles. 

Over the past couple of months, the group has repeatedly increased its underlying profit expectations for the whole year.

At the end of July, the company informed investors that it was expecting underlying profit before tax for the year ending December 2021 to be between £55m and £60m. At the beginning of October, management hiked this target to approximately £70m. 

Champion of penny stocks

With figures showing that demand for second-hand vehicles is not letting up, I think this figure could be conservative. 

The trend of rapidly appreciating second-hand vehicle prices is unlikely to continue indefinitely. Still, when the supply chain issues resolve themselves, Pendragon is well-placed to shift to offering new vehicles. 

The company is exposed to the same risks as Hammerson. Another economic downturn or further coronavirus restrictions could hurt vehicle demand. Inflationary cost pressures may also weigh on group profit margins, impacting growth. 

Infrastructure growth

The final company I would buy is the smart infrastructure group Costain (LSE: COST). 

The UK government has earmarked tens of billions of pounds in spending for infrastructure projects over the next few years. I want some exposure to this mammoth capital outlay. I think one of the best ways to do this is to buy infrastructure companies like Costain. 

After falling to a loss last year, the company is back on the road to recovery. Its profit before tax increased to £9.4m on an adjusted basis for the first half of 2021. Meanwhile, adjusted revenues increased 2% to £556m. 

Plenty of cash 

Unlike many other construction and infrastructure businesses, Costain does not rely on debt. At the end of June, it had a net cash position of £113m. This gives the group plenty of financial flexibility to pursue its growth ambitions and capitalise on new opportunities. 

Unfortunately, this does not make the business immune to the general risks of operating in the construction sector. This sector is usually the first to suffer in any economic downturn. Rising materials costs may also place the company’s profit margins under significant pressure. This could become especially damaging if the group has signed fixed-price contracts with customers.

Despite these risks, I am optimistic about the company’s potential. I would buy the shares today as a way to invest in the UK infrastructure boom. 

Hammerson: high dividends despite pandemic

Take this FTSE 250 stock, which has a dividend yield of almost 12%. I am referring to real estate investment trust (REIT) Hammerson (LSE: HMSO). Specifically, the company focuses on investments in shopping centres across big cities in the UK and it has a presence in other parts of Europe too. With the pandemic having receded significantly, I reckon it might just be a great time to buy up stocks of such companies, which have been hit hard during lockdowns. 

But first I need to assess how much damage the pandemic may have done to the FTSE 250 stock. 

Unsurprisingly, Hammerson has reported losses during the past year. It was not doing much better before that, though. Hammerson has reported losses since 2018. And Covid-19 made the situation even more difficult for it. Between 2018 and 2020, its losses increased by nine times, while its revenues fell. 

Why is it still paying dividends?

Losses are the first big red flag. If the company has consistently reported losses, why is it still paying dividends? Because it is still making profits at an adjusted level even while it runs into losses on a reported basis. Reported numbers are used for regulatory purposes, like taxes. But adjusted numbers reflect the underlying health of the business according to the company itself.

Often, there is unlikely to be a dramatic difference between the two. However, in this case, there is. The big reason for this is that reported earnings have been affected because downward revaluation of properties. This was presumably because of the hit to commercial property values during the coronavirus crisis. But this number is notional and not accounted for in adjusted earnings.

I think that sounds like a fair reason. But I am still uncomfortable with the fact that even before the pandemic, the company was not reporting profits. Additionally, the future of physical stores does not look too bright. The rise of online shopping meant that it was already on the decline before the pandemic started. And the lockdowns have only accelerated its decline.

What I’d do about the FTSE 250 penny stock

Still, I think there is some merit to the stock. The outlook for commercial real estate has improved. With this, Hammerson’s results could start looking up as well. After all, on an adjusted level, it is making profits anyway. 

On balance though, I cannot overlook the fact that the outlook for the segment over the long term is not great. This could continue to keep its share price depressed, while driving up the dividend yield. Right now it just does not sound like a convincing enough opportunity for me to buy. It is on my watchlist, though.

One is Hammerson (LSE: HMSO). And yes, it’s a shopping centre landlord, at a time when the retail sector is only just trying to pick up from its lockdown bruising. The company’s first-half results showed slowing recovery, and the market reacted negatively. The shares lost a couple of a percent in early trading, and are down 63% over two years.

Footfall is still down on pre-pandemic levels, which does not surprise me. And we’re not seeing profit yet, with an IFRS loss of £376m (down from 2020’s £1.1bn). But net debt was cut 16% to £1.9bn, and there’s still £1.5bn in undrawn committed facilities and cash. Hammerson says there is “No significant unsecured refinancing required until 2025.”

There is undoubtedly risk here, as the shape of the retail landscape in the emerging post-pandemic economy is far from certain. But there’s enough safety margin for me. Hammerson is one of my FTSE 250 investment candidates.

FTSE 250 growth stock

Synthomer (LSE: SYNT) is my second pick. The polymer chemicals specialist has seen its shares climb 80% over the past two years. But the wheels did come off an earlier bull phase, as so often happens with early stage growth stocks.

In the half year to 30 June, Synthomer saw underlying revenue climb by 73.7% (with a statutory 67.6% increase). And at the bottom line, EBITDA more than trebled from 2020’s figure to £322.7m. EPS came in at 49.3p, from 10.8p a year ago.

What’s the downside? Well, we could be looking at unusually good growth results as demand catches up from last year’s slump. And we could possibly see some some economic headwinds in the coming years. 

But as far as FTSE 250 growth stock prospects go, I think I’m looking at an attractively valued one here. Oh, and there’s a dividend too — upped at the interim from 3p to 8.7p per share.

5G profits

My final pick is Spirent Communications (LSE: SPT), whose interim figures pleased the market. Spirent develops telecommunications equipment, specialising in 5G stuff. So it’s in a growing market, and I see it as something of a ‘picks and shovels’ investment. When there’s a gold rush, those selling the tools can do well whoever strikes the motherlode.

In H1, order intake gained 14%, with revenue up 9%. Adjusted EPS improved by 9%, and Spirent lifted its interim dividend by 10% to 2.39p per share. I like the company, but do I like its growth valuation?

Spirent shares have wobbled a bit in 2021. But over five years, they’ve almost trebled in value. Annualising first-half earnings, we’d be looking at a P/E of close to 21 on an adjusted basis. On reported earnings, it would be closer to 27. So the risk is that the shares are fully valued now, or even over-valued. And it’s a competitive business too.

But on balance, I don’t find that valuation too stretching. Spirent is on my FTSE 250 watchlist.