Sales of UPVC doors, windows and cladding are likely to be a good proxy for the housing market, so the success of Epwin in its first year as a (re)listed company is unsurprising.

Epwin shares have climbed 36% over the last 13 months. This goes against the tendency of newly-floated businesses to deflate after their private owners have cashed out.

But can the strong start continue? It’s obviously a cyclical business, so at some point things will get difficult. That time is probably not upon us yet, however, if recent commentary on the housing market is any indication.

According to the National Association of Estate Agents, the average number of properties listed for sale with each agency rose by 25% to 55 in July, the highest level seen since summer 2013. Elsewhere, the Nationwide House Price Index reported a 0.4% rise in average prices in July, equivalent to a 3.5% annual increase.

In the rental market, a shortage of supply is also pushing up rents, which rose by 4.6% in July compared to July 2014, according to property firm Countrywide.

In need of maintenance

In Epwin’s recent results, the firm emphasised that the UK’s housing stock has a significant maintenance backlog. Epwin cited Office for National Statistics figures suggesting that of the UK’s 27.8m homes, only 60% are maintained to a satisfactory level.

If the UK economy continues its gradual recovery, some of this backlog could be addressed. Epwin believes that there is “a significant pent up demand within the RMI [Retail, Maintenance and Improvement] space.”

One final point is that Epwin’s exposure to both the rented and owner-occupied sectors is attractive, in my view. Under various brands, the firm’s products are sold to homeowners, private landlords, house builders and operators of social housing.

Unlike estate agents, for example, Epwin shouldn’t suffer from a demographic shift away from home ownership and towards renting.

Do the numbers stack up?

While I have a cautious view towards housebuilders and believe it is too late to buy into that sector, I’m more open to investing in Epwin. I believe the firm could enjoy strong trading for a number of years yet, a view shared by Small Cap Editor Paul Scott.

Epwin scores well against Stockopedia’s algorithms, too. The shares…

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