We recently wrote an article on some of the cyclical companies which were qualifying for Stockopedia’s GuruScreens. Although cyclicals have outperformed the FTSE 100 since around 2009, automobiles and real estate have underperformed the FTSE since the start of the new year. This week we analyse cyclical companies from a slightly different perspective. We take a look at cyclical companies which have moved up in the StockRanks, paying particular attention automobiles and housebuilders.
Cambria Automobiles
Cambria’s CEO, Mark Lavery opened the company’s interim report with an upbeat note, explaining that ‘we have improved performance across all areas of the business and outperformed a growing UK new car market.’ In particular, new vehicle sales up were 17.1% - well ahead of overall growth in the UK market at 10.3%.
One factor driving the company’s growth has been the focus on customer service and IT support. Cambria set a target to respond to all online requests within one hour. The strategy seems to be working. Revenues have grown from £395.8m to £421.5m over the last twelve months, while net profits have grown from £3.49m to £4.08m over the same period.
Mr. Lavery appears confident that the company’s growth will continue, noting that ‘trading results in the key month of March were ahead of plan and the previous year and the Board is confident of maintaining momentum in the second half.’
The brokers seem to share Lavery's optimism. Since September 2013, EPS estimates have risen from $3.10 to $4.15. The firm has beaten the market by 46% this year. This combination of earnings upgrades and strong share price momentum have combined to give Cambria Automobiles an overall MomentumRank of 81. Cambria currently has a StockRank of 91, up from 87 last week.
Barratt Developments
The residential development company, Barratt Developments has a similar profile to other cyclical companies that are exposed to the housing market. The company’s earnings crashed by 47% in 2009 and another 86% in 2010. This happened as the credit which had fuelled the housing bubble of the 2000s was cut back. However, Barratt’s earnings have galloped forward and have grown by more than 600% since 2009.
A major driver of this earnings growth has been a 9% rise in house completions to 14,838. Furthermore, average selling prices have…
